Rye Patch closes C$49.1m financing to fund Florida Canyon mine buy

TORONTO (miningweekly.com) – TSX-V-listed Rye Patch Gold has closed a C$49.1-million financing through a syndicate of agents which exercised their overallotment option.

The Vancouver-based development company said it would use the net proceeds to fund the $15-million cash portion of its commitment to buy the Florida Canyon gold mine, including the Standard gold mine, in Pershing County, Nevada. The company would also issue 20-million shares to the vendor.

Rye Patch advised that it had issued 223.25-million subscription receipts of the company at C$0.22 each. The subscription receipts entitled the holders thereof to automatically receive a security of the company upon closing of the acquisition and the completion of a related $27-million credit facility from Macquarie Bank.

The private placement was completed through a syndicate of agents co-led by Macquarie Capital Markets Canada and Canaccord Genuity, and included Dundee Securities and GMP Securities.

The Florida Canyon gold mine is fully permitted and has been in continuous production since 1986. It is currently producing gold from its existing leach pad facilities.

Rye Patch planned to redevelop the mine, including the construction of a new heap leach pad and waste storage facility, as well as mining a planned expansion of the Florida Canyon orebody. 

Rye Patch expected Florida Canyon to achieve commercial production from the new leach pad in early in 2017.

A March preliminary economic assessment based on a $1 000/oz gold price for the first two years and a $1 150/oz gold price for the remainder of the mine life, had estimated an after-tax net present value, using a 7.5% discount rate, of $45.84-million, for the project with an internal rate of return of 34.4%.

The mine was expected to produce about 75 000 oz/y of gold over eight years at a cash cost of $759/oz.