PERTH (miningweekly.com) – Gold miner Millennium Minerals has reached an in-principle agreement with shareholder IMC Group for a A$20-million mezzanine debt facility to provide working capital as delays at the Bartons underground and the sulphide plant at Nullagine, in Western Australia, continued.

The gold miner on Friday amended the production forecast for 2019, from the previous guidance of between 90 000 oz and 100 000 oz, to between 80 000 oz and 90 000 oz, with all-in sustaining costs for the period expected to increase from the previous estimate of between A$1 300/oz and A$1 375/oz, to between A$1 370/oz and A$1 450/oz.

The amended production resulted from the delays in the Bartons underground mine, and in the commissioning of the sulphide plant, which is expected to restrict production in the first half of 2019 to between 34 000 oz and 36 000 oz.

Gold production in the second half of the year would reach between 46 000 oz and 54 000 oz, as operations are ramped up.

Millennium in March this year announced a re-optimisation of its mine schedule at Nullagine, in conjunction with a detailed review of the operational performance at both the existing openpits and at the Bartons underground mine.

The review has identified two key factors behind the shortfall in ounces - delays in the start and ramp-up of commercial stoping activities at Bartons and the higher-than-planned dilution due to low underground productivity, and a near six-week delay in the construction and commissioning of the Stage 1 sulphide expansion project, which has deferred the delivery of first saleable gold from the sulphide ore sources until the end of June.

“While we are disappointed by these delays, and the impact they have had on our balance sheet, it is important to note that the ounces have been deferred, not forgone, and that there are no systematic issues at Nullagine in respect to the robustness of our resources and reserves, overall reconciliations and recoveries,” said Millennium CEO Peter Cash.

To provide the company with working capital while work at the Bartons underground mine and the sulphide plant is under way, Millennium has entered into an in-principal agreement with IMC Group for an 18-month, A$20-million term loan facility.

It was expected that A$10-million of this funding would be drawn down before the end of the month, with the following A$5-million subject to the production of no less than 6 750 oz of gold in June, and the remaining A$5-million to the production of 6 750 oz of gold in July, or a combined June/July production of 13 500 oz.

The facility will have a standard 13.5%/y interest rate, and IMC will be issued with 60-million options, at a 20% premium to the five-day volume weighted average share price of Millennium at the close of the first draw down, with an expiry date of five years.

“We are very grateful to IMC Group for their continued support of Millennium in providing an interim working capital facility to help us complete the delivery of these two key projects and maintain our longer term growth momentum, including starting mining at the high-grade Golden Gate mining center, continuing an aggressive exploration programme, and delivering on our sulphide expansion programme,” Cash said.