Excellent news from Red Eagle Mining (RD.V) today, as the company announced it signed an agreement with several parties to raise a total of US$19M in equity which was a requirement to finalize the debt facility offered by Orion Mine Financing and Liberty Metals and Mining.
What’s interesting is that a subsidiary of Grana Y Montero (GRAM) has agreed to invest US$7M at C$0.27 per share to gain a 19.94% stake in Red Eagle Mining. The remainder of the cash injection will come from long-term shareholder and royalty holder Liberty Metals and Mining, and Orion Mine Finance. This agreement with Grana Y Montero is important for several reasons.
First of all, it completes a long-awaited capital raise which was needed to unlock access to the credit facility. Secondly, GRAM is a widely recognized and trustworthy contractor, whose shares are even listed on the New York Stock Exchange, where the company has a market capitalization of approximately $880M. With a working capital position of almost half a billion US Dollar, GRAM is in an excellent financial shape. And finally, as this is a South American company, there will be no culture shock during the construction and operating phase of the Santa Rosa project, which might have been different if another contractor would have been appointed without any strong ties with the region.
As part of the deal, Red Eagle has assigned Grana Y Montero as its main contractor to build and operate the San Ramon mine, in what seems to be a deal with a total value of $155M.
The main takeaway? This fully-permitted mining project is now also fully financed and this should undoubtedly attract the CB Gold (CBJ.V) shareholders which can still tender their shares to Red Eagle Mining.
Disclosure: The author holds a long position in Red Eagle Mining. Red Eagle is a sponsor of the website. Please see our disclaimer for current positions.