Impact: Slightly Positive
Denarius Metals announced that it has secured US$15M in financing by entering into two agreements relating to the long-term sale of Au-Ag concentrates and the sale of a 3% NSR royalty over future production at its 100%-owned Zancudo project in Colombia. US$10M has been secured as a prepayment from Trafigura Pte. Ltd., to which the company has agreed to sell 100% of the Au-Ag concentrates produced at Zancudo at market prices over the next eight years. US$5M has been received from a syndicate of third-party private investors from the sale of a 3%NSR royalty on future production at Zancudo. We view this funding package positively, as it provides Denarius with capital and an offtake contract ahead of production planned for late-2024 at Zancudo, where EIS approval (expected this month) would enable mining activities to commence (read notable). The concentrate sales agreement provides investors unhedged leverage to metal prices and reduces uncertainty around product marketing by securing sales for eight of the 10.3-year initial mine life outlined by the PEA (read note). Additionally, the total US$15M non-dilutive financing should help fund the estimated US$14.8M initial capex and ~US$1M 10,000m infill drill program at Zancudo (read note).
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