Toronto-listed Kerr Mines has secured $18-million in project financing to restart the past-producing Copperstone mine, in Arizona.

Kerr and Star Royalties on Monday closed the first instalment of a gold purchase and sale agreement, which would be used to finance the restart of underground operations.

With the first $6-million advanced, CEO Giulio Bonifacio said that the company’s focus would shift to securing long-term lead items, finalising the process facilities to accommodate a whole ore leach approach and sourcing underground contractors and equipment.

Kerr aims to restart production at Copperstone in the fourth quarter of 2021.

The balance of the $18-million payment would be advanced at the request of Kerr, with $6-million payable before the end of February and the final $6-million before the end of April.

In terms of the transaction, Star Royalties would purchase from Kerr an amount of refined gold equal to 9.9% of gold produced at Copperstone until a cumulative 21 000 oz of refined gold were delivered, then 3.3% of gold produced until a cumulative 27 200 oz were delivered, and 1.2% of gold produced thereafter for the remaining life-of-mine.

In addition to the $18-million advance payment, Star Royalties would provide a cash payment to Kerr for each ounce of gold delivered equal to 25% of the average London Bullion Market Association gold spot price for the five consecutive trading days prior to delivery.

The Copperstone mine produced nearly one-half million ounces of gold between 1987 and 1993 through openpit mining. Existing infrastructure which remains from this time, or which has been subsequently installed by the company’s predecessor and wholly owned subsidiary, American Bonanza Gold, is considerable and serves to reduce the current capital requirements for the mine.

The mine will produce an average of 38 347 oz/y of gold at an all-in sustaining cost of $875/oz, according to a 2018 prefeasibility study.