Sacre-Coeur Minerals (CVE:SCM) has closed the first tranche of its gold participating bond offering announced last November, sending shares in the company up by more than 16%.
In November, Sacre-Coeur approved an agreement for Canaccord Genuity to sell its gold participating bonds to raise up to approximately US$6 million.
The company has closed the first tranche of the brokered private placement offering, for $3.78 million of gold participating bonds.
The bonds, which mature on December 31, 2016, bear interest at a rate of 10 per cent per year, on the declining balance payable in cash, quarterly.
The bonds will be redeemed in 16 equal quarterly installments, the gold company said, by delivery of a total of 2,608 ZKB Gold ETF units - Class A (SIX: ZGLDUS) - the value of which is backed by physical gold only, and which is listed on the SIX Swiss Exchange.
An additional tranche of up to US$2.37 million under the same terms is expected to close shortly, for a maximum raise of US$6.15 million, including overallotment.
It is anticipated that the amount of gold committed over the term of the bonds will represent less than 20 per cent of its forecast gold production for the term.
The company plans to use the new funds for the development of its Million Mountain hard rock property in Guyana, specifically the advancement of the NI 43-101 resource to a development-ready decision state and the expansion and improvement of its current production.
Funds will also be used for continued exploration and resource development efforts in Guyana, as well as for general corporate purposes.
Sacre-Coeur Minerals in October said it produced and sold a total of almost 597 troy ounces for the September quarter from its alluvial operations in Guyana, for an average of 49.7 troy ounces per week, citing continued improvement in production and cost performance.
Alluvial gold can be found in soil and sediment deposits. These deposits are usually found around rivers, streams, or any other sort of running water.
The company is focused on exploration for gold, metals and diamonds in South America.
It currently holds a 100 per cent interest in around 850 sq. km of mineral properties in Guyana, including the Million Mountain property ,which hosts an NI 43-101 compliant hard-rock resource of 12.1 million tonnes grading 1.0 g/t gold measured, and 2.18 million tonnes grading 0.9 g/t gold indicated for a total 451,000 troy gold ounces combined.
Shares advanced more than 16.6% to 17.5 cents on Thursday morning.
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