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Lachlan Star Enters Into A C$10 Million Debt Facility With Sprott Resource

Gold producer Lachlan Star (ASX:LSA) is set to raise up to C$10 million via a secured debt facility with Sprott Resource Lending Partnership, the proceeds from which will be used as working capital to advance its projects.

The facility has a 12 month term and is drawable on two C$5 million tranches with tranche 1 expected to be drawn next week and tranche 2 drawable within a six month period after the closing of the facility.

It is also extendable for a further 12 months.

The debt bears interest at 11% and a fee is payable to Sprott for an amount equal to 4% of each draw under the facility, which is $200,000 for each C$5 million dawn.

This is payable by the issuance of ordinary shares of the company to be priced at a 10% discount to the 5 day VWAP of Lachlan's share on the TSX prior to the drawdown.

Lachlan's executive chairman Mick McMullen said, "This is a good outcome for shareholders in that it provides additional working capital on a stand by basis and with minimal equity dilution.

Our owner mining fleet has been operating at budgeted levels, mining at the high grade Chisperos pit is now accessing ore and this debt facility provides working capital cushion for the company which sets it up for a strong calendar year 2013."

Last quarter Lachlan produced 13,722 ounces of gold at its CMD Gold Mine in Chile, an increase of 32% under its ownership.

It also increased the amount of gold stacked, the mine ored and the stacked levels of ore to a record amount.

It also established a full mining access in Chisperos, the highest grade pit, in January recording a 28% increase in tonnes at 24% higher grade than probable mineral reserve.

As part of the Bushranger farm in and joint venture agreement, Newmont also completed a 34 line kilometres of induced polarisation survey and 58 square kilometres of geological mapping,

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