Proceeds will be used to increase owner operator mining at the copper operations and increase third party ore and concentrate purchases for both the copper and gold circuits.
This will ensure the San Santiago plant operates at the level required to meet the company's 2015 forecast production targets through both owner operator mining and third party toll treatment.
The funds were raised through a placement of 228 million shares priced at $0.0035 each to raise $800,000 and the issue of $300,000 in convertible notes on the same terms as the existing June 2015 Series.
The placement includes one free attaching option for every two shares issued subject to shareholder approval.
"We are extremely pleased with the strong support received from our major shareholders and APG, which is testament to the recent material acquisition of the San Santiago Plant and surrounding concessions," managing director Ashley Pattison said.
"These funds provide us with the opportunity to maximise capacity at the plant and bolster the returns for shareholders in the short term."
The company received commitments from existing major shareholders and clients of Alignment Capital to raise the $1.1 million.
The $800,000 equity component will be issued under its existing ASX Listing Rules 7.1A capacity while the convertible notes are being issued as an extension to the existing series that expire on 30 June 2015.
This amendment, amongst other things, extends the debt repayment period until 31 December 2015.
The original date for repayment of this facility had been brought forward to 28 November 2014 following the acquisition of the San Santiago processing plant and surrounding copper mining rights and concessions.
In exchange for this variation, the company will make a principal repayment of $250,000 through a mixture of cash and shares to APG, reducing the outstanding principal amount owed to about $1.45 million.
In September, Minera completed the US$5.5 million acquisition of the San Santiago processing plant.
This was primarily non-dilutive to the company's shareholders and immediately earnings accretive, saving it approximately US$1 million per annum compared to previous gold processing arrangements.
First gold sales started in late August 2014 with gold production from commissioning phase for the balance of the quarter of 454 ounces.
Management control of plant's copper toll treatment and production passed to Minera on 17 September 2014 with 2,742 tonnes of copper sulphide ore processed post from that point up to the end of the quarter for third parties.
This allowed the company to report positive cash flow of $227,000 for the quarter including $100,000 from the 13 days that it had control of the copper flotation circuit.
San Santiago consists of three operational processing circuits including:
- 125 tonnes per day (tpd) CIP gold circuit refurbished in July at a cost of US$700,000 (low CAPEX to upgrade to increase to 200tpd);
- 250tpd copper sulphides circuit (allowing the transition from toll treatment to mix of owner operator and toll treatment); and
- 150tpd copper oxide circuit (currently idle - studies underway to source oxide ore from within the acquired concessions).
It includes three copper mines (one in production today under contract) that it is evaluating for recommencement of production.
The operations have national grid power, sufficient water supply from controlled bores and are located within a supportive mining community.
The tailings dam in place has approximately 12 months capacity and a new tailings dam site has been secured in consultation with the community.
Plans are underway to commence construction of the new tailings dam over the next six to nine months post receipt of permitting.
The $1.1 million in committed funding will allow Minera Gold to maximise capacity at the San Santiago plant.
Cash flows for the December 2014 quarter are likely to increase given the company recorded positive cash flows of $227,000 from processing of gold during the commissioning phase of its gold circuit and the $100,000 from the 13 days that it had control of the copper flotation circuit.
The company is also reviewing a number of drill ready targets at the 9,000 hectares of under explored concessions at San Santiago to assess exploration priorities.
These are located in a highly prospective area for gold, copper and silver.
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