PanTerra Gold conserves US$1m in working capital through share placement to contractor

PanTerra Gold (ASX: PGI) will issue about 5 million shares at an average price of A$0.1875 each to Harold Machinery S.A., the civil engineering contractor on its Las Lagunas gold project in the Dominican Republic.

Importantly, the agreement will effectively provide an additional US$1 million of working capital during the ramp-up phase of the Las Lagunas project.

Harold Machinery has been engaged to operate Panterra’s limestone quarry and deliver crushed stone to the process plant.

The company is a well-established Dominican civil engineering contractor and is currently mining the tails deposit to create a void for re-deposition, after the tails pass through the Las Lagunas process plant.

PanTerra will satisfy the first US$500,000 of invoices over a period of about three months with the issue of shares at A$0.175 each and the second US$500,000 over the following four months at A$0.20 each.

The Las Lagunas process plant was connected to the national power grid last month and commissioning of the plant has begun.

Commissioning will take around 10 weeks to complete before gold and silver production can begin in April.

If a gold price of US$1500 per ounce is maintained through to the end of 2013, PanTerra expects to repay its $37.5 million project loan and generate more than $80 million of free cash during the same period. Project life will be around seven years.

Originally published at: http://www.proactiveinvestors.com.au/companies/news/24930/panterra-gold-conserves-us1m-in-working-capital-through-share-placement-to-contractor--24930.html