Crocodile Gold announces Sprott-backed $18 mln financing for growth projects, regional exploration

Thu 11:00 am by Deborah Bacal

Aside from regional exploration programs and general working capital, the Australia-focused gold miner said it expects to use the proceeds to fund growth projects, such as Big Hill, which is the surface extension of the current underground mining operations at its Stawell mine in Australia.

Crocodile Gold Corp. (TSE:CRK) is raising $18 million through a private placement financing with Sprott Asset Management, Eric Sprott, and Luxor Capital, the company announced Thursday.

The company, with three operating gold mines in Australia, will issue up to 69.2 million units at a price of 26 cents apiece, with each unit made up of one common share and one quarter of a share purchase warrant.

Every whole warrant entitles the holder to acquire another common share of Crocodile at a price of 35 cents, for a period of one year from the closing date, and at 40 cents for an additional period of 12 months beginning on the first anniversary of the placement's closing.

Aside from regional exploration programs and general working capital, the Australia-focused gold miner said it expects to use the proceeds to fund growth projects, such as Big Hill, which is the surface extension of the current underground mining operations at its Stawell mine in Australia.

The company is looking to permit the Big Hill project as Stawell ramps down, with a final feasibility study for Big Hill slated for release later this quarter.

Big Hill, located about 250km northwest of Melbourne, currently has a total of 110,000 ounces, with a projected production period of four to five years based on a preliminary economic assessment (PEA) filed by the company in early 2013. According to the PEA, the project has a net present value of $40 million, and requires upfront capital of approximately $17 million. The property was the focus of intensive mining in the historic gold rush period of the late 1800s and early 1900s.

The company expects a decision on permitting at Big Hill in the later part of 2014, with the mine expected to be in place to start feeding the mill after Stawell underground ramps down. Crocodile also has access to a surface oxide pile of 1.5 million tonnes, which can be used to feed the mill at Stawell, generating revenue while it waits for Big Hill to come online.

The gold miner is forecasting overall gold production in the range of 200,000 to 210,000 ounces this year, and said the financing is expected to close on February 28, subject to regulatory approvals.

Its stock has more than doubled so far this year, currently sitting at 25.5 Canadian cents on the Toronto Stock Exchange.