Black Mountain Resources (ASX: BMZ) has secured a $1.5 million funding facility to finalise and move its New Departure Silver Project in Montana into production.
The high grade project (BMZ:70%), with sampling returning up to 5,194 grams per tonne silver, has had historic production and offers the company near-term production potential.
The company had secured the facility after Alcyone Resources (ASX: AYN), which had agreed to provide it with $3 million in strategic financing, terminated its $25 million financing arrangement with Platinum Partners.
Alcyone now intends to undertake a non‐renounceable rights issue to raise about $13.8 million. It also remains committed to providing the $3 million financing to Black Mountain though this is subject to the proposed rights issue being completed.
"Naturally, we are disappointed that this funding has been delayed and are aware of the implications on timelines at the New Departure Project," Black Mountain chairman Peter Landau said.
"However, with limited work now required to bring the project into production we anticipate that this additional interim funding will ensure minimum disruption to Black Mountain's plans to become a cash generative, low cost producer of high grade silver. With this in mind, we look forward to providing further updates shortly."
New Departure Silver Project
The company had noted on 31 January 2014 that it was finalising the 3D mine model and would complete the 200 feet decline to access the Main Zone from which initial production will predominantly be derived..
Underground and surface surveying, as well as geological mapping, has opened access to various levels of historic workings, enabling greater and more cost effective access to known historic mineralisation zones as well as new mineralisation areas.
As a result of significant progress made so far, the development drives now access three historical mineralisation blocks, in addition to the decline currently being developed towards the Main Zone.
In addition, the 5,194g/t silver sample was taken from the newly opened up Blue Dot Level.
This will access both the Bonanza Zone and Main Zone historical mining blocks and will form a key part of production moving forward.
The drive has been continued through the historic Bonanza Zone, opening access to various levels of historic workings, including the Blue Dot level.
These high grade silver results further underpin the project's credentials and are in line with the extensive historic data available for the New Departure Silver Project.
Optimisation work focused on maximising silver recoveries have shown that the flotation test improved to around 85% silver recovery. This is based on material from the upper mine workings where the ore zone is strongly oxidised and is composed of silver chlorides and base metal carbonates.
However, the company anticipates flotation recoveries to improve further (to over 90%) as the mining operations move into fresh sulphide zones where the bulk of the historic ounces are contained, as opposed to older oxidised areas where the bulk samples were taken.
The Alcyone funding would have been a $3 million loan facility for 36 months (bullet repayment) with interest payable at a rate of 12% pa payable annually.
Black Mountain may repay any funds drawn early provided a minimum of 12 months interest is paid.
Pursuant to the facility, Alcyone will have equal first ranking security and will also have the right to appoint a director to the Board of Black Mountain subject to any required regulatory approvals; and
Black Mountain will issue 4,675,260 fully paid ordinary shares to Alcyone (or their nominee) together with the issue of 4,675,260 unlisted options ($0.15; 30 November 2016) subject to shareholder approval.
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