Patagonia Gold (TSXV: PGDC) has secured funding from its largest investor to assist in the development of its Calcatreu Project in Argentina. The arrangement will see the investor provide up to US$40 million to Patagonia, in exchange for preferred shares of a subsidiary of Patagonia.
The arrangement will see Black River Mine, which is owned by a consortium of investors led by Carlos Miguens, whom owns a 43% stake in Patagonia, provide the funds in exchange for a 40% interest in the subsidiary that owns the Calcatreu project.
The preferred shares, to be issued at $1.00 per share, will enable Black River to appoint one member to Patagonia’s board of directors, while also securing distribution rights. Those rights entitle Black River to 80% of the available cash of the subsidiary should the mine go into operation until it receives US$40 million, after which Patagonia will be entitled to US$60 million, before distributions begin occurring on a pro-rata basis.
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The investment from Black River is expected to support the development of Calcatreu, which Patagonia acquired from Pan American Silver back in 2017 for US$15 million. The property currently has measured and indicated resources of 746,000 ounces of gold equivalent at a grade of 2.36 g/t, alongside inferred resources of 390,000 ounces of gold equivalent at 1.50 g/t, based on a resource estimate completed in December 2018.
The company in November received the final permits required to proceed with the construction of the project, however no economic study has been completed on the project.
Patagonia Gold last traded at $0.035 on the TSX Venture.
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