Crocodile turns to debt markets to fund growth

Crocodile Gold (CRK-T) is looking to fund development through debt.

The company announced a plan to issue $25 million in convertible debt that would pay investor’s interest at a rate of 5%. The move comes as miners look for alternative sources of capital given the depressed state of equity markets. Crocodile is in the enviable position of being a gold producer, which gives it access to debt markets that exploration juniors may not have.

Raymond James is underwriting the offering that will be used to fund some of the company’s key development projects in Australia.

Specifically, Crocodile said the money would be earmarked for its Big Hill Project, and Stawell mine in Victoria. The projects are situated adjacent to one another and Crocodile is currently in the permitting stage at Big Hill and a preliminary economic assessment recently outlined the possibility of extending operations at Stawell another five years.

Next on the list is its Union Reefs project in the Northern Territory of Australia, where the company is planning advanced exploration work at the Prospect Deposit. That work would include the construction of an underground exploration decline.

Then there is the Maud Creek project, also in the Northern Territory, where Crocodile plans to complete a prefeasibility study.

Also on the to-do list is further development of its Cosmo mine, where commercial production was declared on March 1, 2013.

The Debt will mature in April of 2018 and Crocodile is able to pay interest by turning its own shares into cash.

Conversion to Crocodile equity can be done at any time before maturity at a conversion price equal to 110% of the volume weighted average trading price for 20 consecutive trading days.

Crocodile Gold has three operating mines in Australia: Cosmo and the Stawell and Fosterville mines which it acquired in May of last year.

On March 6 the company released financial results for 2012 highlighted by an increase in gold produced of 129% from 2011 to 155,523 ounces and total revenues of $255.9 million.

Cash costs for the fourth quarter were US$998 per oz. sold and annual cash costs were US$1,166 per ounce sold. Those numbers were consistent with company guidance.

In Toronto on March 8, the company’s shares were up a penny to 29.5¢ on 333,000 shares traded.