G Mining hits key milestone at Brazil gold project

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G Mining Ventures Corp. [GMIN-TSXV, GMINF-OTCQB] says it has achieved a key milestone at its Tocantinzinho gold project in Para State, Brazil by signing a renewable power purchase agreement (PPA).

The PPA was entered into between a subsidiary of G Mining and CEMIG, a Brazilian energy provider with generating capacity of 3.3 GW (hydroelectric, wind and solar). The PPA guarantees the supply and delivery of power from March 1, 2024 through December 31, 2026, supplying more than 100% of the expected power demand at the Tocantinzinho gold project during commissioning, ramp-up and initial commercial production. “The contract functions on a consumption basis, with no take-or-pay obligations, ensuring that G Mining’s costs are variable based on actual usage,” the company said in a press release.

The company said electricity costs represent about 25% of processing costs and 10% of total operating costs. All-in cost of electricity is expected to be 25% lower than estimates in a 2022 feasibility study.

On May 31, 2023, G Mining shares closed at $1.10 and currently trade in a 52- week range of $1.18 and 56 cents.

Last year, G Mining unveiled details of a US$481 million construction financing package for the Tocantinzinho project.

It included a US$250 million goal stream with Franco Nevada Mining Corp. [FNV-TSX, NYSE], which has also agreed to provide G Mining Ventures with a US$75 million secured loan, and to subscribe for US$27.5 million worth of G Mining common shares (44.6 million shares as part of G Ventures $116.4 million equity financing via a non-brokered private placement priced at 80 cents per share).

Tocantinzinho is expected to be a low-cost, conventional open pit mining and milling operation. The project is construction-ready and first production is expected in the second half of 2024.

A feasibility study announced in February, 2022, outlines total gold production of 1.8 million ounces of gold over 10.5 years, resulting in average annual production of 174,700 ounces with an all-in-sustaining cost per ounce of US$681 and an initial capital cost of US$458 million.

The mine plan is based on proven and probable reserves of 48.7 million tonnes at an average grade of 1.31 g/t gold or 2.04 million contained gold ounces as of December 10, 2021.

Franco-Nevada is providing US$352.5 million of the total US$481 million package. The balance consists of equity private placements to two strategic investors, including $68.8 million to La Mancha Investments S.a.r.l., and $20 million to Eldorado Gold Corp. [ELD-TSX; EGO-NYSE], as well as up to $40 million worth of equipment financing with Caterpillar Financial Services.

Under the terms of the gold stream, stream deliveries to Franco Nevada will be based on the following schedule: It allows for 12.0% of gold produced until 300,000 ounces have been delivered, and thereafter, 7.5% of gold produced for the remainder of the mine’s lifespan.

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