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Lunnon Metals (ASX:LM8) has received as much as $6 million via a loan facility to fund pre-production costs and site establishment expenses for the Lady Herial gold project in Western Australia, the company confirmed today.
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The secured single draw, term loan facility was provided by financing specialist Bedrock Alpha Credit Income Fund, and will ensure the company has sufficient liquidity before receiving payments under an ore purchase agreement – to commence later this month upon delivery of first ore to St Ives Gold Mining.
“Securing this facility is a key step as we transition toward mining. This [is] a prudent and disciplined way to maintain strong working capital through the early stages of development,” said Lunnon’s MD, Edmund Ainscough.
He continued: “The recent feasibility study highlighted the potential for the project to yield over $45 million in free cash flow (pre-tax) at the current gold price, reinforcing the quality and robustness of Lady Herial.”
“With approvals in place and clearing and site establishment commenced, this funding supports confident execution as we unlock value for shareholders by focusing on safe and efficient delivery of the mine plan.”
Lunnon commenced mining preparation at Lady Herial last week after receiving a positive go-ahead from its board. It also signed construction contracts with Hampton Mining & Civil Services and Goldfields Technical Services, allowing clearing and site establishment in the lead up to mining of the first benches.
The Lady Herial feasibility study included mining of approximately 268,000 tonnes at 1.89 grams per tonne (g/t) gold for 16,270 ounces.
It detailed robust economics for a short-life, high-grade, low strip ratio open pit, to be mined and processed within eight to 10 months.
LM8 is up +2.7%, to 38cps.
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