JOHANNESBURG (miningweekly.com) – Site preparation and advanced construction planning for the restart of the Namib lead and zinc mine were set to start immediately after Aim-listed North River Resources this week secured $12-million in equity funding.

A week after the mine development plan for the $25.2-million restart of the Namibia-based lead and zinc project demonstrated good economics and a payback period of just over a year, long-term strategic investor Greenstone Resources agreed to inject equity as specific project development milestones were met.

The parties this week signed a binding investment agreement, in terms of which Greenstone would invest up to $12-million in the mineral exploration and development company through a series of equity subscriptions and one or more nonsecured, nonredeemable, zero coupon convertible debentures.

The deal would enable North River to complete the study and approval process for the mine’s restart, accelerate development through early works, place long-lead item orders and provide construction equity funding.

“Greenstone has conducted extensive due diligence on the company and specifically the Namib project, so this investment represents a great vote of confidence in the project. It allows us to fast-track the development of the mine and provides a clear pathway to production in 2015,” said North River MD Martin French.

Greenstone made an initial investment of $3.1-million through the subscription of 303.9-million ordinary shares at 6p apiece, with the first $340 320 having been raised in a private placement on June 30.

The balance of $2.78-million for the remaining 270.6-million shares would be paid in the first tranche of the investment agreement.

Admission to trading on Aim for the first tranche shares, which would increase Greenstone's interest in North River from 2.41% to 18.36%, was expected to take place on July 16.

Greenstone planned to provide a further $8.9-million of funding in three tranches of $2.9-million at 7p a share;  $5-million at 9p apiece and $1-million at 1p, subject to the satisfaction of certain milestones.

The third and fourth tranches would be limited to ensure Greenstone's maximum holding in North River did not exceed 29.99%.

“North River is an ambitious company. It is our objective to use the Namib project as a platform to capitalise on numerous other opportunities in Namibia and elsewhere to build a larger business,” Greenstone senior partner Mark Sawyer said in a statement.

North River and Greenstone also entered into an agreement allowing Greenstone to nominate one director to North River’s board; maintain its percentage shareholding by participating in future equity issues; and nominate customers for a proportion of the group's mineral production equal to Greenstone's interest in North River’s issued share capital.

The agreement also included orderly market and corporate governance provisions.

“Greenstone is committed to maintaining the independence of North River and has agreed that a majority of the board shall comprise independent directors,” the parties added.