Fortune Announces New Terms for Acquisition of Revenue Silver Mine

08/21/14 | By | 104 More

OURAY – London, Ontario-based Fortune Minerals, Limited announced revised deal terms on Wednesday, Aug. 20, regarding its pending Revenue Silver Mine acquisition. 

The new terms include a significantly lower purchase price under an accelerated payment schedule, said Troy Nazarewicz, Fortune’s Investor Relations Manager.

Fortune, through its wholly-owned subsidiary Fortune Revenue Silver Mines Inc., already paid Star Mine Operations LLC and its parent company Silver Star Resources LLC of Denver $14 million for an initial 12 percent participating interest in the Revenue Silver Mine in May 2014, and has been the operator of the mine since that time.

Terms of the previous acquisition deal included deferred payment obligations of US$34.5 to US$36.8 million, to be made in quarterly installments over up to 5.75 years, in order for Fortune to acquire the remaining interest in the mine.

Under the latest deal, which Fortune President and Chief Executive Officer Robin Goad in Wednesday’s announcement described as “more attractive” for his company and its investors, Fortune can now complete the acquisition for a 100 percent stake in the mine by paying the owners US$15.5 million up front, with an obligation to pay a further US$10 million following closing. 

Fortune will also make $4.5 million in additional payment installations over time, to the mine’s previous owner.

Included in the revised deal is $35 million in financing through Lascaux Resource Capital Fund to help cover Fortune’s acquisition and operation expenses, through the use of a finance arrangement called a metal prepay facility. “It is essentially an advance against production, where the principal amount of the loan is repaid from production from the mine on a fixed schedule of metal shipments,” Nazarewicz explained.

The new financing also provides $4 million in working capital so that Fortune can immediately invest in its equipment and facilities “to achieve operational efficiencies we need to be successful,” Nazarewicz said.

The target closing date for the transaction under the new terms has been extended from Sept. 2 to Oct. 1, 2014. The closing was originally scheduled for July 31.

According to Nazarewicz, operations at the mine are still at the commissioning phase, as the company ramps up to its targeted 400 ton per day production rate. Two concentrate deliveries have been made so far to the Teck Resources Trail Smelter.

“At this stage, we continue to seek additional underground miners and qualified people to fill roles in the mill, supervision and technical jobs,” Nazarewicz said.

swright@watchnewspapers.com or Tweet @iamsamwright

 

Share on StumbleUponDigg thisPin on PinterestShare on RedditShare on LinkedInShare on TumblrShare on Google+Tweet about this on TwitterShare on FacebookEmail this to someonePrint this page

Tags: , ,

Category: Business

Leave a Reply

You must be logged in to post a comment.