PERTH (miningweekly.com) – ASX-listed Cleveland Mining on Monday announced that it had raised about A$2.5-million through a combination of a royalty-linked note and a pre-payment from a gold refiner.

The gold and iron-ore developer received A$1.87-million under the royalty linked note, which has a 12-month term.

Under the royalty note, a 6.23% production royalty has been linked to the first three months of production, following the certified commissioning completion and steady-state production of a new ball mill at the Premier mine, in Brazil.

The noteholders would have six months from the execution to elect to convert the face value of the note to shares in Cleveland, priced at 6c a share, and to forego the interest and royalty component.

Besides the funds raised under the royalty linked note, Cleveland also secured an additional A$670 000 through a pre-payment by a gold refiner, under an offtake agreement.

The combined proceeds would be used to complete the expansion the Premier gold mine to more than double production to 40 000 oz/y by the end of 2015. The expansion would be complete in three stages, with the first stage increasing the gravity circuit from 40 t/h to 100 t/y by installing a new jaw crusher, cone crusher and ball mill.

The second stage of the expansion would see Cleveland add a new flotation circuit to directly treat the gravity tailings, while the third staged involved the expansion of the Premier gold resource inventory through substantial further drilling.

Company MD David Mendelawitz reported on Monday that along with additional funds received early in the capital raise process, the new funds allowed the expansion programme to progress prior to the final completion of the raising.

The company had also completed all necessary documentation to formally extend its loan facility with Platinum Partners from September 2015 to September 2016, subject to the grant of a 2% royalty over the Premier mine.

This royalty could be bought back for $1.5-million.