Friday, 6 July 2012

Sunridge Gold closes first tranche of $9.25 mln private placement

Sunridge Gold Corp.  (CVE:SGC) said late Thursday that it has closed the first tranche of a $9.25 million private placement financing with private Chinese energy and mining company Shanghai Richstone Investment Group.

The junior gold miner issued 5.4 million common shares and nearly 865,000 share purchase warrants to raise gross proceeds of $2.0 million in the first tranche.

Sunridge said that subject to final regulatory approval, the remainder of the placement offering is expected to close late this month once the company has Chinese foreign exchange approvals.

Each warrant under the financing will allow Richstone to purchase one common share of Sunridge at a price of 55 cents, for a term of one year.

The company said it plans to use the new funds to complete the feasibility study on its Asmara project in Eritrea, as well as for other expenses related to the property and general corporate purposes.

Beijing-based Richstone has oil and mining production in China in addition to interests in oil recovery technology, metal trading, and banking, with ties to a Chinese investor base.

At present, its total assets exceed US$400 million and it has annual after tax income of over $80 million, Sunridge noted.

The total $9.25 million private placement deal will see Richstone snag a 19.8 per cent equity interest in Sunridge, assuming the warrants are exercised in full.

In early May, the junior explorer said a prefeasibility study (PFS) confirmed positive results at its Asmara North project, concluding that an integrated operation is the "optimum" economic situation.
The study showed that operating all four deposits of the Asmara project, known as Emba Derho, Adi Nefas, Gupo Gold and Debarwa, as an integrated operation with ore being processed at a single central mill, is technically feasible. Assuming a pre-tax, base-rate discount of 10 percent, the resulting project showed net present value of $555 million, with an internal rate of return of 27 percent.
The company also released later that month a feasibility study for its 100 percent-owned Debarwa volcanogenic-massive-sulphide (VMS) copper-gold-zinc deposit at Asmara, which concluded that operating the deposit as a stand-alone mining operation is also economically viable.
The Debarwa feasability study showed a net present value of $71 million at a 10 percent discount rate, an internal rate of return of 41 percent, and payback in 1.1 years from start of production.
The recently started feasibility study on the Asmara North deposits, for which the proceeds of the financing will go toward, will examine the integration of the Debarwa deposit with the Asmara North deposits into one operation.
Sunridge has said that a Debarwa stand-alone operation provides it with earlier cash flow generation than if the deposit were integrated with the Asmara North deposits.
The ultimate decision will be made when the Asmara project feasibility study is completed in 2013.
Under the terms of the financing agreement, Richstone will be entited to nominate a representative to the company's board of directors, so long as it holds at least 5 per cent of Sunridge's issued and outstanding shares.
Richstone will also have the right to participate in any equity financing of the company in order to maintain its pro rata interest, as long as Richstone holds at least 10 per cent of Sunridge.

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