Classic Minerals appears set for a significant financial boost as it pushes towards production at its Kat Gap gold project after executing a binding term sheet with an international fintech for an initial US$10 million (AU$15.3 million).
The agreement with Swiss-based AuResources also provides for the advance of a further US$50 million (AU$76.5 million) in five tranches of US$10 million (AU$15.3 million) each, subject to previous advances being repaid in accordance with the terms of the deal.
Repayment of the initial facility is to be made across six quarterly payments from the end of October, with AuResources agreeing to accept gold bullion should Classic enter production at Kat Gap during the facility period. Classic says it will use the first tranche of funding to build production capacity at Kat Gap, in addition to developing the Lady Magdalene and Lady Ada deposits at its Forrestania gold project.
AuResources has a mission statement of “leveraging blockchain technology to revolutionize the precious metals market”. Its funding obligations will be supported by Luxembourg-based Black Manta Capital Partners – a next-generation investment bank focused on digital and tokenised assets.
Forrestania sits near Southern Cross in Western Australia and boasts an indicated resource of 7.27 million tonnes at 1.33 grams per tonne gold for 311,050 ounces. Combined with its Kat Gap project, the company’s total resource around Forrestania comes to 8.41 million tonnes at 1.45g/t gold for 391,417 ounces.
With the initial funding, Classic plans to spend $7.3 million on expanding plant capacity and $5 million on its operations including machinery hire, wages, consumables and camp extensions and costs. A further $1 million has been set aside to develop the Lady Magdalene and Lady Ada deposits, $1 million for mining studies to define an ore reserve and another $1 million will be set aside for contingencies.
The Kat Gap operation is a shallow, previously unmined gold deposit that was first uncovered in the 1990s when the now-defunct Sons of Gwalia completed a resource estimate and scoping study at the site.
Classic Minerals chairman John Lester said: “Classic is appreciative of AuResources and Black Manta Capital Partners in evaluating and endorsing our gold projects as being suitable for their consideration and investment. The launching of this round of funding puts Classic firmly on the international scene. We will now have the capacity and capability to deliver value to AuResources, Black Manta Capital and our shareholders.”
According to the terms of the deal and subject to the completion of due diligence, AuResources will advance US$1 million (AU$1.53 million) within 30 days of the execution of the terms sheet. The remaining US$9 million (AU$13.8 million) is expected to be advanced within 90 days of the execution of the terms sheet and following the delivery of definitive documentation.
Classic says AuResources’ primary innovation is tokenising future gold production contracts and turning them into digital assets, opening up investment opportunities much earlier in the gold supply process than traditional markets allow.
In August last year, Classic’s “Gekko” plant produced the company’s inaugural gold bar from Kat Gap during testing, using a 989-tonne section of ore taken from a 6504-tonne stockpile. Performance of the plant was found to be consistent with the results of earlier bench-scale metallurgical tests that reported 5 per cent mass recovery and gravity gold recoveries of between 65 per cent and 75 per cent.
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By Michael Philipps
