Crocodile uses debt to fund growth in Oz

Australia-focused Crocodile Gold (CRK-T) is looking to fund development through debt. The company is issuing $30 million in convertible debt that would pay interest at a 5% rate.

The move comes as miners look for alternative sources of capital due to the depressed state of equity markets. Crocodile holds the enviable position of being a gold producer, giving it access to debt markets that exploration juniors may not have.
Raymond James is underwriting the offering, and has a $3.5- million over-allotment option.

Crocodile is directing part of the funds to its adjacent Big Hill gold project and Stawell gold mine in Victoria, 250 km northwest of Melbourne.

Crocodile is in the permitting stage at Big Hill, and a recent preliminary economic assessment has outlined the possibility of extending operations at Stawell for another five years.

Next on the list is the company’s Union Reefs gold project in the Northern Territory, 185 km southeast of Darwin. There it’s planning advanced exploration work at the Prospect deposit, including excavating an underground exploration decline.

The Northern Territory also holds Crocodile’s Maud Creek gold project, where the company plans to complete a prefeasibility study.

Lastly, in the same area of Northern Territory, Crocodile aims to keep developing its flagship Cosmo gold mine where commercial production was declared on March 1, 2013.

The $30-million debt will mature in April 2018, and Crocodile could pay interest in shares that would be sold by a third party.
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, Stawell and Fosterville, which it acquired last May.

On March 6 the company released financial results for 2012, highlighted by a 129% increase from 2011 in gold produced to 155,523 oz., 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 oz. sold. The numbers are consistent with the company’s guidance.

In Toronto on March 8 — the day news of the debt was released — the company’s shares were up a cent to 29.5¢, with 406.4 million shares outstanding.