Manas Resources (ASX: MSR) has finalised plans for a two tranche, A$5.1 million capital raising to accelerate permitting and development activities at its wholly owned Shambesai Gold Project in the Kyrgyz Republic.
The company will issue 51 million shares at $0.10 each through a private placement managed by Blackwood Capital.
On completion of the capital raising, Manas will have over $9 million in cash which will leave it ideally placed to accelerate pre‐development activities at Shambesai and facilitate negotiations for project debt financing.
Project financing discussions are progressing with strong interest received from a number of debt providers.
Stephen Ross, managing director, said the capital raising was an extremely positive step for the company.
"We will have over $9 million cash on hand after the capital raising is completed, allowing us to negotiate an acceptable debt facility to finance the low‐cost, high‐margin Shambesai Gold Project.
"Pre‐development activities will also now commence in earnest, alongside a resource drilling program at Shambesai and Obdilla."
Pre‐development activities at the project will include completion of the Environmental and Social Impact Assessment for permitting purposes, construction of the mine camp, commencement of road works and completion of geotechnical and plant‐site sterilisation drilling.
An estimated 10,000 metre drilling program will begin shortly at Shambesai and Obdilla aimed at increasing the resource at both projects.
Two part share placement
The share placement will be completed in two parts, with tranche one of 34 million shares ($3.4 million) settling next week.
Tranche two for the balance of 17 million shares ($1.7 million) is expected to settle in late May 2013, following a shareholders' meeting that will be convened to provide prior approval for tranche two.
Bankable Feasibility Study
A Bankable Feasibility Study (NYSE:BFS) remains on schedule for completion in the June 2013 quarter.
Recently updated Resource and Reserve estimates for Shambesai will be used to form the basis of the BFS and for the detailed mine design.
The Measured, Indicated and Inferred JORC Resource now totals 8.1 million tonnes at 2.69 grams per tonne (g/t) for 697,000 contained gold ounces (0.3g/t gold cut‐off for oxide resources and 0.75 g/t for sulphide resources).
The Measured and Indicated categories now contain 95% of the total Resource.
Based on new pit optimisations and preliminary mine design, a Proved and Probable Reserve totalling 2.5 million tonnes at 3.4g/t gold for 277,000 contained gold ounces have been identified to be economically minable by an initial open cut pit.
Manas is working to finalise the BFS with Perth‐based mining and engineering consultants Mintrex.
Most recently, Manas secured a mining and development licence for the Shambesai Project.
The mining and development licence secures legal tenure for the company over the deposit area and allows the design, construction and commissioning phases of the project to go ahead.
Low cost gold production is expected to start in 2014.
Shambesai could produce 245,000 ounces of gold at an average OPEX of $411 per ounce and CAPEX of US$32.6 million from 2014.
This would deliver a net cash post-payback of US$107 million at US$1,100 per ounce which would increase to US$151 million at US$1,600 per ounce.
Securing a $5.1 million private placement means Manas is now ideally positioned to negotiate an acceptable debt facility to finance the low‐cost, high‐margin Shambesai Gold Project.
Importantly, strong interest has been received from several debt providers and debt financing negotiations are progressing.
This new equity boosts Manas' cash reserves to over $9 million providing sufficient funding for the company to also accelerate pre‐development activities at Shambesai.
Manas is on the road to near term, potentially low cost gold production with a number of potentially re-rating catalysts expected including the completion of the BFS and the securing of debt financing.
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