News blog
Angel Mining
- BY: Andrew Hore |
- POSTED: 26/11/2011 |
Greenland-focused minerals producer and explorer Angel Mining has renegotiated the terms of the promissory note provided by Yorkville Advisors.
Angel will issue 25m shares at 1.37p each to repay $536,000 of the loan plus interest. The remaining $1.33m owed by Angel attracts a 4% interest rate and will be repaid between March 2012 and September 2012. The note was previously convertible at 3p a share.
The agreement is dependent on Cyrus Capital Partners agreeing to extend the repayment terms for its loans to the end of 2012 or later. If this does not happen, Yorkville will ask for repayment by 11 December. Angel also has a £10m Standby Equity Distribution Agreement with Yorkville.
In October, Angel raised £1.2m from a placing at 1.6p a share. This followed a £1m fundraising at 2p a share and a £2.18m placing at the same price - both earlier in this financial year. At the current price of 1.25p a share, Angel is valued at £11m. Net debt was $33.1m at the end of February 2011.
Earlier this year, Angel produced its first gold form the Nalunaq gold mine. Cash generated from the Nalunaq mine in October is estimated to have covered its operational costs. So far, Angel has sold 1,206 ounces of gold at an average price of $1,719 per ounce. Delays and problems with the processing plant have hampered progress.
The mine has a life of two years at the moment but there is scope to extend that through exploration. Grades can range from 5g/t to more than 100g/t. Angel had hoped to reach an annual production rate of 24,000 ounces of gold in the fourth quarter of 2011. The cash cost is expected to be $700/ounce. Not cheap but still well below the current gold price.
The Black Angel zinc/lead mine is still the main focus of the group, though. The mine was in production between 1976 and 1990 and $80m will need to be invested in the mine to recommence production. Angel needs to invest in installing a cable car for access to the mine plus further development of the mine.
The company hopes that Black Angel will recommence production by the first half of 2013. The metal produced could fetch $2,500 per tonne and the cost of mining is estimated at $1,500 per tonne. There is potential to explore in the surrounding area.
Longer-term, Angel is seeking to use its mining expertise further by acquiring other mines. These will be hard rock gold and metals mines that are similar to the existing interests. There are acquisition opportunities in Greenland. Management hopes that a more diversified portfolio of assets will make Angel a better long-term investment. At the moment it needs all of its cash for the existing assets.
Download the latest AIM Journal from http://www.hubinvest.com/AIMPDFNovember2011_26.pdf
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