Gold-backed loan to support work at Fire Creek
Klondex Mines Ltd. has won $20 million in financing for underground development and bulk-sampling at its Fire Creek gold project in Crescent Valley.
Waterton Global Value L.P. provided the loan, which carries a 9 percent annual interest rate. Klondex Mines, which is headquartered at Vancouver, plans to repay the loan with physical gold that it expects to produce at the mine.
The gold payments, which would begin in March 2012, would be based on a 20 percent discount to the spot price of gold.
The lender also can require payments in cash.
Klondex will use the money for construction of a 4,000-foot decline, in-fill drilling from underground stations and initial gold production through bulk sampling, which is expected to begin by the end of this year. The company has been working the property for 30 years.
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