Barrack funds Cinola to production

The project’s owner, City Resources Canada (TSE), has worked out an agreement with Barrack Mines of Australia that will provide funding for City to meet its current working capital requirements and for completion of the Cinola project feasibility study.

The agreement is also expected to provide City’s equity funding requirement (up to a maximum of $18 million) for the Cinola project development, although this is subject to the establishment of limited recourse project financing by Barrack.

The new agreement, still subject to regulatory approvals, replaces a previously announced agreement between the two companies earlier this year. Under its terms, Barrack and a third party will jointly subscribe for a private placement of 5 million shares in City Resources at 65 cents per share, with attached warrants.

In return for providing sole risk funding for the completion of the feasibility study, Barrack will acquire an undivided 10% interest in the Cinola project.

Once the feasibility study is completed, Barrack will have an option to acquire a further 40% undivided interest. However, this option is also conditional upon Barrack establishing limited recourse funding for project development and construction.

Once production begins, Barrack would be entitled to 80% and City Resources 20% of the proceeds until Barrack has been paid back in full for its advances, plus 50% of the funds it spent to complete the feasibility study. Thereafter proceeds would be on a 50-50 basis.

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