West Perth-based EnviroGold Ltd has announced that "due to the current financial climate it will take longer than originally anticipated to close the financing for its 70 per cent-owned Las Lagunas gold project in the Dominican Republic".
In a statement, EnviroGold executive chairman Brian Johnson said the delay had become clear following recent discussions with its bankers.
The company said it was still working with Standard Bank to pull the financing together and progress to drawdown. Provided that progress remains on track and a positive outcome is achieved in the next six weeks, no construction time will be lost, its statement said.
Nevertheless, as a contingency, the Company will investigate other sources of financing including issuing either convertible notes or bonds to fund the project.
Mr Johnson said that he was confident financing will be forthcoming for the project as it is extremely robust at prevailing gold prices.
In any event, the Company has commenced negotiations to increase its shareholding in the Dominican project.
Negotiations are also underway to purchase a 2.5 per cent royalty stream to be paid by EnviroGold as vendor consideration for the purchase two years ago of a 20 per cent shareholding in Las Lagunas Limited, the project developer.
In the meantime, engineering and equipment procurement is progressing, with major long lead plant items such as the Isa Mill, Ball Mill, and Oxygen Plant ordered. Earthworks for the plant site will commence within two weeks.
Despite not being able to immediately commence construction of the process plant at Las Lagunas, EnviroGold is aggressively pursuing the acquisition of properties in northern Peru which could support the Company's second project, the 75,000 ounce per year Trujillo Gold Project, and expects to finalise all dealings within two to three months together with an economic review of anticipated development costs and profitability.
Mr Johnson said that he anticipates the forecast consolidated after tax profit of the Las Lagunas and Trujillo projects will be in excess of $40million per year based on current gold and silver prices, and be achievable within three years.
The forecasts including updated figures for Las Lagunas, will be released by the end of June 2008.
