Otterburn Resources Corp recently announced that K92 Holdings International Limited has entered into financing agreements with CRH Funding II Pte Ltd, an affiliate of Cartesian Royalty Holdings and Cartesian Capital Group, which are expected to assist in restarting the Kainantu Gold Project in Papua New Guinea.
The agreements consist of a gold prepayment investment and an equity investment and total C$10.5 million. Upon signing, K92 drew down the first tranche under the gold prepayment agreement.
The Kainantu project comprises a number of gold-copper deposits, including Irumafimpa and Kora. Proceeds from the financing are expected to be used to refurbish and bring Irumafimpa back into production in 2016.
K92 purchased Kainantu from Barrick Gold Corporation in 2014 when Barrick initiated its divestiture program in South East Asia. Barrick originally purchased Kainantu from Highland Pacific Group in 2007 for US$141.5 million and proceeded to invest significantly in underground mine development, drilling, regional exploration work, roadworks and camp amenities.
K92 CEO Ian Stalker said, “The Kainantu Gold Project is an attractive gold mine restart project with existing infrastructure in place and is coupled with almost 400sqkm of adjacent prospective exploration properties.
“We have now attracted a supportive financial partner to assist us in our restart. After extensive due diligence including time on site, Cartesian has decided to move forward with K92 as we advance this very unique opportunity. The financing has been structured in a way that is less dilutive to the K92 share structure than a traditional equity investment, and involves the prepayment of gold, based on a percentage of our production from Irumafimpa.”
Under the gold prepayment agreement, CRH has committed to provide K92 with up to US$4.8 million over four tranches in exchange for a percentage of gold produced at Irumafimpa over a 36 month period, subject to a minimum of 18,000 ounces of gold and a maximum of 20,000 ounces of gold.
CRH has advanced K92 the first tranche of US$962,795 under the agreement. Remaining tranches will be advanced upon K92 fulfilling certain technical milestones and other conditions, including the initiation by February 29, 2016 of the previously announced reverse takeover transaction with Otterburn.
In addition, CRH has committed to an equity investment of up to C$3.5 million in K92 (or Otterburn following completion of the reverse takeover) over two tranches.
Following the agreement, CRH designated Graham Wheelock as its appointment to K92’s Board of Directors. Graham Wheelock is a seasoned geologist and mining professional with 32 years of experience and during that time has worked in 55 countries globally.