by Greg Klein | June 7, 2016
A large Brazilian land package hosting a small-scale gold producer with expansion potential benefits from a US$6-million allocation. Under a deal announced June 7, Cartesian Royalty Holdings, an affiliate of the private equity firm Cartesian Capital Group, will provide Equitas Resources TSXV:EQT with a $5-million revolving gold prepayment loan and a $1-million private placement. All figures are in American currency.
Equitas has alluvial extraction underway at its newly acquired Cajueiro gold project, producing about a kilogram of gold per month. The company hopes to increase that number by improving recovery and expanding the resource. Equitas now has two rigs conducting a 20-hole, 1,600-metre drill campaign on the central Brazil property.
Subject to approvals, the financing would allow Equitas to draw down instalments on meeting development targets, with up to three years to repay. Repayments made within a year could be re-drawn, giving the company a revolving borrowing capacity of $5 million.
Every $1 million drawdown would require repayment of 2,100 gold ounces within a year, or 2,300 ounces between one and three years.
Cartesian would get a 0.5% NSR on production from existing Equitas assets at financial close, and on any new assets acquired or developed with the funding. Equitas may buy back the NSR for $4 million. Cartesian would also have board representation.
Equitas president/CEO Chris Harris said the money should secure the company’s “near- and medium-term growth plans … and help us towards our goal to become a profitable, cash-flow generating, self-sustaining mid-tier gold producer in Brazil, with a potentially significant development portfolio.”
With offices in New York, Sao Paulo, Shanghai, Warsaw and Bermuda, Cartesian manages over $2.4 billion in capital.