Minera IRL (TSX: IRL; LSE-AIM: MIRL) has struck a US$80-million debt and equity deal with private Argentine business interests that will allow the Lima-based gold miner to go ahead with mine construction at its advanced Don Nicolas gold project in southern Argentina’s Santa Cruz province.
Until now, Minera IRL has held a 100% interest in the project, but it intends to sell a 45% interest in its Argentine subsidiary Minera IRL Patagonia S.A. — which holds its Argentine assets, including Don Nicolas — to the Argentine company Compania Inversora en Minas (Ciminas) for US$45 million in four tranches. Another 4% equity interest in the Argentine subsidiary will be issued to the arrangers of the transaction. That will leave Minera IRL with a 51% interest in Don Nicolas.
One of the four above tranches will see Ciminas take down 9.1 million shares in Minera IRL, while the other three tranches reflect investments in common and preferred shares of Minera IRL’s Argentine subsidiary.
On top of that, Ciminas has arranged for a US$35-million bridge loan, with funds to be directed to mine construction. Minera IRL says it will seek out a replacement loan in Argentina, but if it can’t arrange one, the bridge loan may be negotiated into something longer term.
The fully permitted Don Nicolas project is comprised of many shallow gold deposits that can be mined simultaneously and processed at a single central mill.
With the influx of cash, Minera IRl now expects it can be producing gold at Don Nicolas at a rate of 50,000 oz. per year as soon as late 2014. It is already negotiating with a consortium comprised of Argentine engineering firm SAXUM Ingenieria and Kappes Cassiday & Associates to carry out the engineering, procurement, construction & management of the Don Nicolas project.
More detail on the project can be seen in the feasibility study completed in early 2012 and in our site visit to the property a year earlier:
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