Photo by: Reuters
TORONTO (miningweekly.com) – TSX-V-listed juniors Golden Reign Resources and Marlin Gold Mining this week announced that they had entered into a a binding agreement for a $15-million gold streaming arrangement at Golden Reign’s San Albino gold deposit and the surrounding area, located in Nueva Segovia, Nicaragua.
Under terms of the transaction, Marlin would provide construction and development capital and, in turn, Marlin's wholly owned subsidiary, Sailfish, would be entitled to buy 40% of gold output at $700/oz until an amount of $19.6-million had been recovered by Sailfish, and 20% of gold output at $700 per troy ounce thereafter.
Before commercial production starts, Sailfish would also be entitled to receive an 8% twice-yearly coupon payment on the $15-million deposit. Golden Reign would also be required to make minimum monthly payments of $282 800 once commercial production had been declared.
"We are extremely pleased to announce the signing of the letter of intent with Marlin. Marlin shares our vision for the continued expedited advancement of our high-grade San Albino gold asset,” Golden Reign president and CEO Kim Evans said on Wednesday.
Golden Reign’s flagship San Albino deposit had been the company's priority focus for the past four years. Covering a 3.5 km2 area within highly prospective 138 km2 land-holdings, it would be the first target moved towards production. Once operations had been successfully established, the company expects to use the cash flows to progress exploration targets at the Las Conchitas, Murra and the El Jicaro concessions, in its strategy of adding significant value to the company while reducing shareholder dilution.
“We look forward to and are excited to be transitioning from an explorer to producer,” Evans said.
Concurrent with the closing of the transaction, Marlin would take a 19.9% interest in Golden Reign by buying 21.3-million common shares for about $3.2-million, subject to regulatory approvals.
Marlin shares on Thursday rose 16.67% to C$0.14 a share and that of Golden Reign rose 8.57% to C$0.19 apiece.