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.
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
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
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.
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"
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
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
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.