Classic Minerals has executed a terms sheet for a forward sales agreement that will fund development of its gold projects. Pic via Getty Images
Classic Minerals secures US$60m in funding to drive development of its gold projects
Mining
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- Classic Minerals secures up to US$60m in funding to increase Kat Gap production capacity
- Funds will also be used to progress development of its Forrestania project tenements
- Each tranche of funds from the forward sales facility from AuResources will be repaid through delivery of gold bullion
Special Report: Classic Minerals has scored a coup after signing a deal with AuResources for US$60 million ($91.8 million) in funding via a forward sales facility to progress development of its gold projects.
The company is currently focused on bringing its Kat Gap project in Western Australia to full production following the successful start of trial mining that allowed first gold to be poured in mid-August 2023.
Kat Gap, which sits ~170km south of Southern Cross, has an indicated resource of 20,488oz @ 2.5g/t and an inferred resource of 60,139oz @ 2.19g/t.
Under its Stage 1 trial mining plan, Classic Minerals (ASX:CLZ) plans to mine a significant portion of the oxide component of the indicated resource down to a depth of 45m during the first quarter of 2024.
Kat Gap generated gold sales of ~$482,000 in the December 2023 quarter, having also generated gold sales of $485,000 for the September 2023 period.
The planned Stage 2 trial mining plan requires a much larger, future open pit down into the fresh rock to enable estimated throughput of 200,000tpa.
CLZ also moved to secure full control of the 500km2 Forrestania gold project tenements, about 120km south of Southern Cross and over 50km strike of the Forrestania greenstone belt.
Not only do the tenements have historical production of 27,146oz of gold from the processing of 95,865t of ore grading 8.81g/t, they also have current inferred and indicated resources of 7.27Mt @ 1.33g/t for 311,000oz of contained gold within the known Lady Ada and Lady Magdalene deposits.
There is also plenty of exploration upside at the tenements.
Funding to accelerate development
While gold production at Kat Gap has brought in some revenue, it is no way sufficient to progress further development of both Kat Gap and CLZ’s other projects as quickly as the company would like.
This makes execution of the binding terms sheet with Swiss fintech startup AuResources AG for a project development facility of up to US$60 million so welcome.
Funding obligations will be supported by Luxembourg-based Black Manta Capital. The gold purchased from CLZ will be used as security through a distributed ledger technology with gold “tokens” to be digitised for investors.
Under the facility, AuResources will initially advance US$10 million to CLZ to further develop production capacity at Kat Gap and progress development of the Lady Magdalene and Lady Ada deposits at the Forrestania gold project.
Repayment of this first tranche will be carried out in six quarterly payments starting from 30 October 2024. These can be made in gold bullion at CLZ’s discretion if it has started commercial production at Kat Gap during the facility period.
The terms sheet allows for AuResources to advance the company a further US$50 million in five equal tranches subject to previous advances having been repaid by delivery of gold bullion in six equal quarterly deliveries starting six months after each relevant advance.
Use of further tranches
Should CLZ access the second tranche of funding, it plans to use the funds for further capital expenditure, along with mining and infrastructure spending at Kat Gap, as well as development of the Forrestania gold project.
Further tranches will also be used for the same purposes, along with mining at Forrestania and on exploration.
“Classic is appreciative of AuResources and Black Manta Capital Partners in evaluating and endorsing our gold projects as being suitable for their consideration and investment,” CLZ chairman John Lester said.
“The launching of this round of funding puts Classic firmly on the international scene.
“We will now have the capacity and capability to deliver value to AuResources, Black Manta Capital and our shareholders.”
This article was developed in collaboration with Classic Minerals, a Stockhead advertiser at the time of publishing.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.
