G Mining unveils US$481 million financing
G Mining Ventures Corp. [GMIN-TSXV, GMINF-OTCQB] on Monday unveiled details of a US$481 million construction financing package for its Tocantinzinho gold project in Para State, Brazil.
The package is expected to provide a pathway to production for the Tocantinzinho mine. It includes 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).
G Mining shares advanced on the news, rising 12.3% or $0.08 to 73 cents in light trading volume. The shares are currently trading in a 52-week range of $1.16 and 56 cents.
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.
As a result of the financing package and G Mining Ventures’ cash on hand of $54 million as at June 30, 2022, G Mining will have total committed capital of $535 million, an amount that exceeds the remaining development capital for Tocantinzinho of $455 million.
Under the terms of the gold stream, stream deliveries to Franco Nevada will be based on the following schedule:
- % of gold produced until 300,000 ounces have been delivered.
- Thereafter, 7.5% of gold produced for the remainder of the mine’s lifespan.
- The $250 million deposit will be available for draw-down after G Mining has spent at least $95 million on the Tocantinzinho project from January 1, 2022, and subject to certain conditions.
- G Mining will receive 20% of the spot gold price for each ounce of gold delivered.
The $75 million term loan is a six-year term loan with an availability period of 3.5 years at G Mining’s option following full funding of the stream. The loan carries an initial interest rate of 5.75% annually, reducing to 4.75% after completion tests have been achieved at the project.