News Column

Minera Gold Limited - San Santiago Funding and Operational Update

September 5, 2014



ENP Newswire - 05 September 2014

Release date- 03092014 - Australia'sMinera Gold Limited (ASX: MIZ) is pleased to advise that the Company has now signed the binding financing agreements for US$5.5 million of funding to complete the proposed 100% acquisition of the San Santiago processing plant in Peru that contains a copper circuit and a newly refurbished gold circuit.

The acquisition also includes 9,000ha of surrounding mining and exploration rights. The funding package in place is a combination of funding from Minera's existing precious metals streaming partner, SilverStream SZEC, and through a mezzanine debt facility with an existing shareholder of Minera Gold.

In summary, SilverStream will fund:

US$3.0m through the previously announced silver purchase agreement and

US$1.4m through wavering the terms of the original gold purchase agreement and bring forward the first milestone tranche of that agreement.

Minera has also entered into a two year mezzanine agreement with an existing shareholder of Minera whereby the investor will provide Minera with a US$1.1m facility for the purpose of completing the San Santiago mill acquisition. The facility is a combination of straight debt (US$600,000) and also a convertible component for US$500,000. Interest on this facility is 18% per annum.

Subject to the vendor satisfying the final conditions precedent, settlement of the Peru acquisition is now confirmed for on or about 12 September 2014.

Working Capital Facility Update

The Company and its advisers continue to assess proposals from both commodity traders and term debt providers for the provision of a long-term working capital facility. Management has to date received and reviewed a number of proposals for between US$3 - US$5 million in debt and convertible facilities. However, the Board is of the opinion that better terms will be presented now that the funding of the acquisition is complete.

On securing this facility, proceeds will be employed to repay all amounts owing to Anglo Pacific Group with the balance being used for working capital in the Minera Gold businesses.

San Santiago CIP gold-copper Circuit Update

The Company commenced commercial processing through the San Santiago mill's CIP circuit post commissioning in the first half of August 2014. Gold shipments commenced soon after and ore from the Company's 100% owned Torrecillas mine, also in Peru, provided the majority of the feed to the processing plant during August.

Equipment availability within the circuit was far better than expected with the crushing and grinding circuits operating at or above name plate capacity when operational. The CIP operations did however experience unforseen shutdowns during the month as a result of external power supply issues to site by the local Peruvian power company and the recent 6.9 magnitude Peruvian earthquake where the epicentre was less than 100km away from the mill.

These power supply issues have been rectified now and returned to normal. A larger diesel generator has however been ordered and will be delivered to site to provide a suitable back up power supply should Minera experience other extended power supply issues.

The metallurgical balance testing and reconciliation for the month is still ongoing and being verified by Minera's technical consultants who are onsite at the moment with the Company's Chairman, Mr Alex Losada. In addition, consultants will undertake a full assessment of the plant's performance following the first month of operations post commissioning.

Toll Treatment Contracts

As at the end of August, three contracts have been signed with local mine operators for the toll treating of third party ore. These contracts run for 12 months and delivery of ore under these contracts has commenced. The commitments received equate to approximately 22% of our plant capacity and are for:

300 tonnes per month (TPM) at a grade of between 45-90 g/t Au;

200 TPM at a grade of between 30-45 g/t Au and

150-200 TPM at a grade of 17-25 g/t Au from oxide material.

Additional sources of quality gold ore continue to be assessed to ensure full compliance with local laws in relation to the processing of third party material.

For more information on Minera Gold please visit our web site at www.mineragoldlimited.com

Contact:

Mr Ashley Pattison

Tel: +61 8 9200 1860


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Source: ENP Newswire


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