TORONTO (miningweekly.com) – Canadian mineral exploration and development company Arizona Mining has closed a C$15.6-million financing with Osisko Gold Royalties, enabling Arizona to undertake an aggressive drill campaign at its flagship Taylor deposit, and for general working capital uses.

TSX-listed Arizona has sold a 1% royalty on any lead/zinc/silver sulphide ores mined from its Hermosa project, located in Arizona, for proceeds of C$10-million.

Osisko Gold insiders had also subscribed for a total of 8.93-million units at C$0.56 apiece, for gross proceeds of C$5-million, while others had subscribed for 1.06-million units for a further C$590 000. Each unit comprised one common share and one half of one common share purchase warrant. Each whole common share purchase warrant was convertible into one common share of the company at a strike price of C$0.75 for a period of 18 months from closing.

“The drilling to-date that comprises the current resource on the Taylor deposit only tests a small portion of the prospective terrain as defined by geology, geophysics and historic drilling. This drill programme will give us a much better idea of the size and grade potential of the deposit. We have two drills currently on site and expect to add an additional three,” Arizona president and CEO Jim Gowans stated in a recent press release.

Arizona had entered into a letter of intent to acquire the remaining 20% interest in the Hermosa project, which was subject to shareholder approval.

The Taylor deposit had a current resource of 39.4-million tonnes in the inferred category grading 11% zinc equivalent (ZnEq), when using a 6% ZnEq cutoff grade.

The Taylor deposit remained open to the north, west and south over land controlled by the company and would be aggressively drilled to test the limits of the resource. Arizona had recently completed metallurgical testwork on drill core from the Taylor project that had estimated overall recoveries of 92.9% lead; 85.5% zinc and 91% silver using industry standard froth flotation processing technology.

The company also held another project on the Hermosa property, the Central deposit, a 280-million-ounce silver/manganese manto oxide development project that had a prefeasibility study completed in December 2013.