Junior gold producer Century Mining (CMM-V) has nailed down a conditional underwriting commitment for US$65 million to restart Lamaque, its gold mine in Quebec that historically has produced more than 9.2 million ounces of gold.
The financing from a consortium of international investors is subject to the transfer of all assets and liabilities associated with the mine into a new, wholly owned subsidiary of the company. The subsidiary’s shares will then be pledged as part of the security package for the loan.
In addition to the $65 million debt financing, the company is in the midst of negotiations for additional financing with two separate parties. One of the two deals would involve a merger with another resource company in a bid to pool resources to develop Lamaque and pay down debt.
The other involves an agreement with a group of financiers for debt and equity financing for Lamaque.
The three alternatives are not exclusive of each other, the financially troubled company says. It points out that any combination of the US$65 million debt financing and one of the two deals could be completed.
Century also unveiled a shares for debt arrangement in which it would undertake a private placement of up to C$2 million in lieu of payment to certain creditors. Under such a deal, Century would issue up to 8 million shares at a price of C$0.25 per share.
The offering is being made to various creditors in order to cut corporate debt and strengthen Century’s balance sheet, the company maintains.
“Many of the creditors that are participating in this offering will play a key role in the restart of the mine and have supported the company for the past year,” Margaret Kent, Century’s president and chief executive, said in a statement. “We are happy that as key stakeholders they will recognize the potential upside when financing for the project is completed.”
Apart from the Lamaque mine, Century’s San Juan mine in Peru produced 63,124 ounces of gold in 2007.
Century closed down 3¢ or 12.8% at 20.5¢ per share.
The junior has a 52-week trading range of 1¢-28¢ and 169.1million shares outstanding.
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