Orinoco secures Brazil project funding

West Perth gold explorer Orinoco Gold is aiming to become a gold producer in 2015, after announcing a $14 million package to commence production at its Cascavel project.

Up to $US8 million ($10.2 million) of the deal will be funded through a gold sharing arrangement with a private Singaporean investment group, Chancery Asset Management, which will provide upfront development capital in return for a share of production.

Chancery will receive a minimum of 16,000 ounces of gold under the agreement, or 20 per cent of production for a period of three years.

Azure Capital and GMP Securities Australia will manage a $1 million share placement at 7 cents per share, while Azure will be lead manager for a non-renounceable entitlement issue of $2.7 million, also pitched at 7 cents.

Orinoco is targeting production in the final quarter of 2015.

The move follows its sale in late 2013 of its share of the 14 Mile Well project, located about 50 kilometres east of Leonora.

At that point, the company said it would adopt a strategy of focussing on Brazilian production, including Cascavel and the surrounding 70 per cent owned Faina joint venture.

Cascavel is located around 300 kilometres west of the Brazilian capital, Brasilia.

Managing director Mark Papendieck said the funding package would enable the company to transition into a self-funded junior gold producer.

“This funding package is particularly well suited to provide the flexibility that a high-grade gold project such as Cascavel requires, where the coarse nature of the gold makes it prohibitively expensive to define JORC compliant resources,” he said.

“Considering the challenging investment climate for the junior resource sector, securing a funding package of this size is a huge achievement, and I would like to thank both Chancery, Azure and GMP Australia for the support and faith they have shown in Orinoco, the strength and quality of our team and the quality of our assets – in particular Cascavel.”

Cascavel was up 9.7 per cent to 7.9 cents per share at the time of writing.