Para Resources, Pandion Mine Finance Strike $16.6 Million Deal to Restart Gold Road Mine

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Tuesday, July 17, 2018

Last August, Para Resources (TSX-V:PBR) acquired the Gold Road Mine in Oatman, Arizona from Mojave Desert Minerals, giving the junior gold producer possession of the only fully permitted mine in the largest primary gold district of Arizona, as well as all associated assets, including claims, 500 tonne per day mill, lab, vehicles and more. The Vancouver-based company is planning to make the Gold Road Mine its second producing project along with its El Limon Mine in Zaragoza, Colombia. On Tuesday, Para moved a step closer to realizing that goal, penning a letter of intent with Pandion Mine Finance to provide $16.6 million in financing to advance the project in exchange for future gold production.
Highlights from a recently completed NI 43-101 compliant Preliminary Economic Assessment for the Gold Road Mine showed a pre-tax Net Present Value (at a 5% discount) of US$81.3 million and internal rate of return of 238%. Initial capital was pegged at US$5.7 million with a payback period of 1.5 years. Total All-in Sustaining Costs were estimated at US$632.79 per ounce of gold, with overall calculations figured at US$1,200 per ounce gold. The initial mine life was projected at 7 years, assuming 1.1 million tons of potential mill feed at an average diluted grade of 6.5 grams per tonne.
The LOI is non-binding and remains subject to the completion of customary due diligence, other approvals and negotiation of definitive agreement between Para and Pandion. Per the agreement, Pandion will advance Para $16.6 million in one tranche as partial consideration for 50,280 ounces of gold. No gold is required within the first year, but the balance is expected to be delivered in the following 40 months. The price of the gold, more specifically the discount to market, will be determined in the final agreement, with Para benefiting from any upswing in the price of gold. Pandion will also collect a $450,000 origination fee upon closing the transaction or a $450,000 cancellation fee plus 3.5 million warrants for shares of PBR at C$0.19 should Para walk away from a definitive agreement.
Furthermore, Pandion will have the option to elect to take shares of PBR in place of up to 2,000 ounces of gold. The number of shares will be set the day before the transaction closes. There are also terms for Para to buy out the purchase agreement during the course of the contract.
Para CEO Geoff Hamson says the financing will allow the company to move forward with selecting a contract miner, investing in additional infrastructure to save on expenses, hire a local management team and start underground drilling to expand the mine's resource. The cash inflow will also facilitate drilling on the adjacent Tr-Ue Vein properties later this year to better define historical average grades that have exceeded 23.4 grams per tonne gold.
Since a run-up in value in December from 13.5 cents to as high as 24.5 cents in February, shares of PBR have been caught in a range approximately from 18 cents to 23 cents. Shares closed Monday at the lower end of the band at 18.5 cents.

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