Classic Minerals wraps up LDA Capital subscription, eyes near term gold production

Classic Minerals has completed subscription of $15m in equity capital via US institutional investment group LDA Capital to accelerate production at its flagship Kat Gap gold project in WA.

Part of its $20.1 million institutional funding package announced late last year, the LDA Capital component comes in the form of option agreement and $5.1m in a convertible note issue.

And today LDA has subscribed for 554,588,344 shares (subscription shares) of the 658,000,000 shares (collateral shares) for a total of $494,080.00 at a price per subscription share of $0.00089.

The remaining 103,411,656 collateral shares for which LDA has not subscribed will remain in the account of LDA, with the group able subscribe for a minimum of 50% and a maximum of 200% of the shares put to them (under the terms of the facility).

The price represents 90% of the average VWAP of shares during the 30-day pricing period exclusive of adjusting events being $0.00089.

Capital to pursue production at Kat Gap

The structure of the package is low cost and substantially reduces project financing risk for phase 1 of the company’s flagship Kat Gap Gold Project, where the target is full scale production in the near term.

Classic Minerals (ASX:CLZ) chairman John Lester said the LDA facility had allowed the company access to capital at reasonable rates.

“The LDA Capital Facility was established specifically to ensure the Company had access to a reliable source of capital not wholly dependent on volatile, short-term shifts in equity market sentiment,” he said.

Lester said the capital injection will be used to progress work at Kat Gap.

Processing plant almost complete

Construction of the processing plant is already 80% complete, with facilities currently under construction by contractor Industrial Power Solutions (IPS) and on track to be commissioned this month.

The gold processing plant is expected to have the capacity to process up to 100,000t of ore per annum from the project, which currently has an Inferred resource of 975,722t grading 2.96g/t gold, or 92,856oz of contained gold.

Operating costs are expected to be low due to the low base metal content of Kat Gap ore, which results in a very low reagent consumption.

The company has also built up a stockpile of ore from the Kat Gap project for processing on the ROM pad and has completed the tailings storage facility.

This article was developed in collaboration with Classic Minerals Limited, 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.