TORONTO (miningweekly.com) – Mining junior Marlin Gold has secured a lower interest rate on a loan from its principal shareholder Wexford Capital, and increased the facility from $3-million to $35-million in order to lift Marlin's ownership of project developer Golden Reign Resources from 18.3% to 19.9%.

TSX-V-listed Marlin on Wednesday reported that its controlling shareholder had agreed to drop the coupon rate on its loan facility from 15% to 8%, and also to extend the maturity by one year to January 15, 2018.

Marlin had bought 9.6-million shares of Golden Reign at C$0.08 per share, bringing its total holding in the company to 30.93-million shares.

Meanwhile, Marlin's wholly-owned subsidiary Sailfish Royalty Corp continued to fund its gold stream on Golden Reign's San Albino property, in northern Nicaragua. Under the stream agreement, Sailfish would provide $15-million in capital in return for the right to buy 40% of gold output at $700/oz until the first $19.6-million had been recovered by Sailfish, and 20% of gold output at $700/oz thereafter.

Before commercial production was declared at the project, Sailfish had the right to receive an 8% twice-yearly coupon payment on the purchase price from Golden Reign. To date, Sailfish had funded about $536 000 of the purchase price.

San Albino was expected to contribute 4 000 oz of gold from 2017, rising to 8 000 oz in 2018 to Marlins production.

Sailfish also held a 1.5% net smelter return royalty on Canarc Resource Corp’s El Compas deposit in Mexico.

ORGANIC GROWTH
Marlin also reported that its new mining contractor at its fully owned La Trinidad openpit heap-leach mine, in Mexico, had been mining about 56 500 t/d since becoming fully mobilised on March 9. There were now about 3.2-million tonnes of overburden to move until Marlin started accessing the high-grade HS Zone.

This higher-grade zone was expected to catapult Marlin into becoming one of the lowest-cost producers in the world, providing growth in stacked tonnes, increased stacked grades and a decreased strip ratio, which augured well for operating costs.

Marlin chairperson and CEO Akiba Leisman stated during a recent investor presentation in which Mining Weekly Online participated that previous owner Eldorado Resources had mined the La Trinidad deposit at a grade of about 1.8 g/t. Since acquiring the project and declaring commercial production on November 1, 2014, Marlin had been busy mining the lower-grade (0.8 g/t at an 11:1 strip ratio) remaining ore to get to the higher-grade HS Zone underlying the old workings, which it planned to access from the third quarter onwards, delivering 3.25 g/t at a 7:1 strip ratio. While La Trinidad produced only about 14 602 oz of gold in 2015, output was expected to ramp up to 42 000 oz for 2016 and 2017, and 63 000  oz in 2018, when operations cease.

Leisman advised that the project would provide the company with about $80-million to $85-million in true free cash flows, providing a platform from which it could expand its business interests going forward.

He also noted that LA Trinidad had several regional exploration targets, with the potential to extend the mine life by about four years.

ARIZONA OPPORTUNITY
Meanwhile, Marlin also on Wednesday announced that it had entered into a definitive agreement to acquire a parcel of land directly bordering the south end of the property that hosted the primary deposit at the Commonwealth silver and gold project, in Cochise County, Arizona, for $750 000.

The acquisition was expected to accelerate permitting at Commonwealth, which Marlin acquired last year, and was expected to save at least $2.5-million in improved logistics, mainly through shortened haul distances, over the course of the project's life.

“This is an exciting property purchase for the company as it consolidates our position in this burgeoning mining district and we are hopeful that additional mineable resources can be found on this property,” Leisman said.

An April 2014 preliminary economic assessment put out by previous owner Commonwealth Silver and Gold Mining had calculated a net present value on the project of $101.3-million with an internal rate of return of 58.2%. The project presented Marlin with an advanced-stage low-capital openpit heap leach opportunity that could add about 36 000 oz of gold and 1.3-million silver to Marlin production yearly profile from 2019 onwards.

The Commonwealth project would require an investment of about $27.2-million to start production. Marlin expected to create a stream on the Commonwealth project before making a construction decision.

Leisman noted that Marlin was aiming at producing about 60 000 oz/y of gold equivalent from 2018 through to 2026 at $400/oz.

“We used the commodity downturn to be aggressive with mergers and acquisitions, acquiring the one-million-ounce Commonwealth project last year near the bottom. We think it’s an untapped district,” he advised.

Marlin also on Wednesday announced that it intended to embark on a fully backstopped rights offering of C$13-million to further strengthen its balance sheet. It was expected that the backstop would be provided by entities controlled by Wexford Capital. The rights offering would be subject to definitive terms and conditions, as well as receiving approval from the TSX-V.

Marlin planned to use the proceeds of the rights offering, if completed, to fully exercise the remaining $4.25-million in option payments due by July, to complete the purchase of the properties that hosted the primary deposit at Commonwealth.

Marlin’s TSX-V-listed stock had gained 92% since the start of the year to C$0.48 on Thursday.