Crocodile Gold (TSX: CRK; US-OTC: CROCF), which operates three gold mines in Australia, has announced an $18-million private placement with Sprott Asset Management, Eric Sprott and Luxor Capital Group to finance its growth projects.
As part of the placement, the Toronto-based miner will sell 69.2 million units at 26¢ apiece, with each unit containing one share and a quarter of a share purchase warrant. Every whole warrant will allow holders to buy one Crocodile share at 35¢ within a year from closing, and at 40¢ for the following 12 months.
The transaction should conclude around Feb. 28, 2014, dependent on Crocodile finalizing the agreement and receiving regulatory approval. Once completed, the shares and warrants have a four-month statutory hold.
Crocodile says the net proceeds will help advance its growth projects — particularly the Big Hill gold project in Australia — as well as for regional exploration and working capital purposes.
“From a project perspective, the Big Hill project is our top priority as it moves through the permitting process. Resource-definition drilling at all of our sites comes in a close second, followed by carefully selected exploration programs designed for growth,” Rob Hopkins, the company’s manager of investor relations, said in an email. With the financing Crocodile should have enough funds for the year, he adds.
The Big Hill deposit is the updip extension of the Stawell Magdala system that Crocodile has been mining at the Stawell underground gold mine in Victoria state. The project is set to become the company’s next ore source, replacing the nearly depleted Stawell mine. A feasibility study for the project is due out shortly.
Production at Big Hill appears relatively inexpensive. An early 2013 preliminary economic assessment pegs start-up costs at A$17 million (US$15.3 million). Once up and running, the open-pit operation should churn out 108,000 oz. gold from 2.3 million tonnes grading 1.65 grams gold per tonne. It has an estimated four- to five-year life.
The financing news, which pushed Crocodile shares up nearly 10%, comes just a month after the company posted strong operational results for 2013. The firm’s three mines — Cosmo in the Northern Territory, and Fosterville and Stawell, which are both in Victoria state — produced 58,267 oz. gold in the fourth quarter. This marks a quarterly high. Full-year output was 210,696 oz. gold, above the guidance of 200,000 to 205,000 oz.
This year the company anticipates producing 200,000 to 210,000 oz., as Stawell ramps down.
Crocodile stopped underground mining at Stawell’s deeper levels in late 2012 but has since exploited the historic mining blocks and some upper levels of the mine, Hopkins says.
The company received “encouraging” results from a small exploration program at Stawell late last year that could increase the mine life, Hopkins says. “But for now we expect underground mining to extend into the third quarter of this year.”
Crocodile’s goal is to stay cash-flow positive at its three mines and meet its 2014 production forecast, he adds.
The firm ended Feb. 20 up 2.5¢ at 28.5¢, within a 52-week range of 6.5¢ to 32¢. The full financials are due in March.
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