Mandalay Resources has raised $C43 million ($45.7 million) in funding to help develop operations such as the Costerfield gold-antimony operation in Victoria.
The Canadian company has posted negative cashflow and reserves across its operations since last September due to “unexpected operational and financial events” that have put it at risk.
Mandalay purchased the underground Costerfield mine in December 2009 from Western Coal. Over the past year the company has been exploring the Youle narrow gold vein, which the company has pitched as a potentially major expansion for the mine.
Last month, the company implemented Youle’s maiden resources and reserves into Costerfield’s total mineral reserve. This added 94,282 ounces of gold and 7042 tonnes of antimony (most often used for flame proofing) at grades of 11.2 grams a tonne and 2.7 per cent, respectively.
In addition to the $C43 million, secured from a $C50 million raising announced on Monday, the company is making use of a $US8 million ($11.3 million) bridge loan to address the company’s current liquidity concerns.
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Mandalay president and chief executive officer Dominic Duffy said the money raised in the latest financing round would allow the company to execute its Youle development program, with production set to start by the end of 2019.
The company hopes the Youle development will help Mandalay meet its goal to double production in the next three years.
“While we regret that several recent unexpected events have had an adverse impact on the company’s cash position and put a strain on our short term liquidity, we are confident that this financing will restore Mandalay to a sound financial position, giving us a much stronger balance sheet,” Duffy said.
“From this position we can focus on our operational goals, de-risk our expansion programs and invest in our exciting near term exploration opportunities.”
The raising and bridge loan will also be used to develop the emerging Aurora zone at Mandalay’s Björkdal gold mine in Sweden. The public offering, organised through the Toronto Stock Exchange (TSX), is set to close on February 20.