Lumina Gold Corp. [LUM-TSXV, LMGDF-OTCQX] said Tuesday it is raising $26 million from separate private placements to fund drilling and pre-feasibility work at its 100%-owned Cangrejos gold-copper project in southwest Ecuador.
The first $16 million will be raised from a brokered private placement of up to 26.7 million common shares priced at 60 cents each. In addition, the company said it plans to complete a concurrent private placement of up to $10 million worth of shares on the same terms of the brokered offering.
The underwriters have been granted an over-allotment option to sell an additional $2.4 million worth of shares at the offering price.
Meanwhile, Lumina said it has upsized its existing credit facility with mining financier Ross Beaty to $6 million from $5 million. The term of the facility has been extended from September 30, 2021 to December 31, 2021. “Ross Beaty will convert his entire principal and interest associated with the facility into shares at the offering price concurrent with closing, which is scheduled for October 4, 2021.
Lumina shares eased 1.6% or $0.01 to 62 cents. The 52-week range is $1.01 and 62 cents.
The Cangrejos project covers 6,374 hectares in the Andean foothills and is located in El Oro province, 30 kilometres southeast of the provincial capital of Machala and the Pan American Highway. It is also situated 40 kilometres from the deep-water commercial port of Puerto Bolivar. The property is accessible via paved and eight kilometres of gravel roads.
“Cangrejos is an exceptional gold deposit and one of the few of this scale that is 100% controlled by an independent developer,’’ the company has said. “Ecuador has made substantial progress in its mining sector with the successful commissioning of the Fruta del Norte and Mirador [mines]. Now the country will turn its focus to the next generation of development projects,’’ Lumina has said.
According to the results of a preliminary economic assessment (PEA) released in June, 2020, Cangrejos is capable of producing 360,000 ounces of gold and 46 million pounds of copper annually for 25 years.
Initial capital costs are estimated at $1 billion, with average cash operating costs forecast at US$545 per ounce and all-in-sustaining costs of US$604 an ounce, net of by-product credits.
The PEA takes into account an indicated resource in the Cangrejos deposit of 469.7 million tonnes, containing 8.9 million ounces of gold, 1.2 billion pounds of copper, 10.9 million ounces of silver and 23.2 million pounds of molybdenum.
On top of that is an inferred resource of 254.9 million tonnes, containing 3.5 million ounces of gold, 472 million pounds of copper, 5.7 million ounces of silver and 8.3 million pounds of molybdenum.
The existence of the Gran Bestia deposit was confirmed in results from a 2018 drilling program comprised of 12,800 metres in 32 holes. Gran Bestia is estimated to contain an indicated resource of 101 million tonnes, containing 1.5 million ounces of gold, 180 million pounds of copper, 1.9 million ounces of silver, and 3.4 million pounds of molybdenum.
The PEA contemplates large-scale open pit mining, using a 100% owner-operated equipment fleet. Five mining phases were designed for Cangrejos and two for Gran Bestia, both using a technique that optimizes present value by using a declining cut-off grade over the mine life.