PERTH (miningweekly.com) – ASX-listed Alcyone Resources has signed a three-year offtake agreement valued at $10-million over its Texas silver project, in Queensland.
The silver purchase agreement with Powerline Value Fund formed part of the company’s recapitalisation and restructure of its Texas project. The company said that the funds would be used to repay outstanding debt.
Under the terms of the agreement, Powerline would prepay for a certain level of the company’s silver production, while Alcyone would satisfy the agreement by delivering silver ore over a three-year period.
Alternatively, during the term, Alcyone could choose to sell silver to Powerline in spot transactions.
An initial A$2-million payment would be made promptly.
Executive chairperson Paul D’Sylva said on Thursday that the signing of the silver purchase agreement was a key milestone in the company’s plans to restructure its balance sheet and operations, to become a leading profitable Australian silver mining company.
“Securing the support of a strategic institutional investor like Powerline confirms the quality and potential of the Texas silver mine. We are very pleased to have Powerline’s support in the future growth of the company,” he added.
As part of the transaction, Powerline had the right to nominate two representatives to the Alcyone board, following the drawing down of the initial advance.
Alcyone pointed out to shareholders that the offtake agreement fulfilled a condition of a proposed non-renounceable rights issue to raise up to A$16.25-million.