Africa-focused Aureus Mining has signed a $10-million liquidity facility with Rand Merchant Bank and Nedbank, as well as an $11.5-million brokered equity financing deal, at a price of 5p a share, with GMP Securities Europe and Numis Securities. The agreement with GMP and Numis would see a private placement of 153-million new Aureus common shares to raise proceeds.
The funds would be used to strengthen the company’s balance sheet, while allowing Aureus to reduce its accounts payable, facilitating the procurement of additional mining equipment, which would enable accelerated mining of its 900,000 oz New Liberty mine, in Liberia, to compensate for lost production and to reduce the waste stripping shortfall.
Aureus believed it could deliver on the production and cost estimates, which, at the prevailing gold price should see it generate sufficient cash flow to meet its continuing obligations, including its $6.6-million debt repayments until the end of 2016. The debt repayment was due in January 2017.
With the benefit of the accelerated mining rate, made possible by the planned addition of the new mining fleet, all-in sustaining cost (AISC) was now estimated at $820/oz over the mine life, with cash costs higher in earlier years owing to higher stripping ratios. Aureus expected to meet production guidance for 2016 of about 125 000 oz at an AISC of $959/oz.
“Aureus has faced the challenges of a low gold price environment combined with issues associated with the impact of the Ebola outbreak in Liberia and the commissioning and ramp-up of production at New Liberty, resulting in a delay to commercial production. Reducing our creditor balance to a normal operating level will allow additional mining equipment to be procured, which will accelerate the mining rate and allow the company to reduce the shortfall in waste mining tonnage,” CEO David Reading said.
New Liberty is a high-grade, Archean, shear-hosted gold deposit with well-defined alteration and sulphide mineralogy. New Liberty is located within the Bea-MDA property, in Grand Cape Mount County in the north-western portion of the Republic of Liberia, approximately 100km north-west of the capital, Monrovia. The history of the New Liberty deposit can be traced back to the acquisition of an exploration license in 1996.
Unfortunately the project has been hampered by a shortage of funding and the turbulent history related to the Liberian civil war from 2000 to 2005. Good relations with the Ministry of Lands, Mines and Energy of Liberia really helped overcome these obstacles. Stability returned to Liberia from 2006. During 2009 the discovery of the Latiff zone meant that the ore body could be mined over a continuous, 2km strike length. Various starter pits provide greater mining flexibility and a 2km long pit yields over 900,000 oz in reserves.