Denver-based Dakota Mining intends to borrow US$5 million from Repadre Capital (TSE) to develop an oxide deposit at the Gilt Edge gold mine site in South Dakota.
The agreement consists of a US$4-million production loan at 9.5% interest. The loan is repayable on a sliding scale based on net smelter returns, beginning with 5%.
Repadre will retain an additional 3.5% royalty on the deposit, known as Anchor Hill, and on other gold deposits at the site. The Toronto-based company will buy US$1 million in special warrants at a unit price of US$1.24, which will be convertible into common shares of Dakota.
The agreement requires that Dakota obtain additional financing of at least US$5 million; it hopes to raise US$7 million through the sale of special warrants on terms similar to those of the Repadre agreement. The Anchor Hill deposit contains about 230,000 oz. gold, and permitting is scheduled to be completed this year. Meanwhile, a drill program is testing the property’s potential for hosting additional reserves.
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