Deal values Red Mountain’s gold project at double market cap
In one of the most difficult mining markets in many years, high grade gold explorer Red Mountain Mining has signed a new deal that will see project level funding for its Philippines Batangas based Gold Project significantly increased.
Red Mountain has renegotiated its original deal with UK based strategic financing partner Bluebird Merchant Ventures that will see Bluebird’s stage one equity contribution at Batangas increased from US$1m to US$1.7m or AUD$2.35m.
Bluebird will earn 25% of the project for its initial US$1.7m contribution valuing the Batangas Gold project at more than double Red Mountain’s current market cap.
Bluebird are required to pay US$1m before the 27th November 2015 and a further US$700k by the 29th February 2016 in order to earn their initial 25% of Red Mountain’s 100% subsidiary, Red Mountain Mining Singapore (RMMS) which owns the Batangas Gold project.
The first US$850k will be paid directly to Red Mountain Mining as partial reimbursement for sunk costs at Batangas and the remainder will be paid into RMMS to assist with drilling, permitting and the DFS.
At the completion of stage 1, the parties will form a 25%/75% joint venture with each party required to contribute according to their respective shareholdings.
Bluebird however, have two further opportunities to increase their project funding to move their share of the project from 25% to 50.1%.
They can choose to increase to 50.1% before September 30th 2016 by contributing a further US$1.7m before the permitting and DFS has been completed.
If however Bluebird choose to wait until after the DFS and permitting has been completed to move to 50.1%, they will need to contribute a further $3.8m in recognition of the increased value of the project once the DFS and permitting has been completed. They have until December 2016 to take up this option.
Red Mountain Managing Director Jon Dugdale said, “The signing of this new strategic financing agreement with Bluebird is a very positive milestone for the Company, as it will provide funding to advance the Batangas Gold Project to Definitive Feasibility and final permitting then initial development.”
“Preparations to commence the planned drilling program are underway and we are very keen to drill our immediate high grade gold targets at Tamarind and SWB Extended as soon as possible.”
Red Mountain Mining (RMX)
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