21st Nov 2016 10:39
LONDON (Alliance News) - Eurasia Mining PLC on Monday said it is considering the potential financing of some of its Monchetundra platinum project by Lemuria Royalties Inc using a royalty structure.
The group said its 80%-owned subsidiary Terskaya Gornaya Kompaniya has granted exclusivity to Lemuria to conduct a due diligence on the project, in northwest Russia, until January 15, 2017.
Last month, Eurasia said the subsidiary was in talks with an international engineering company to manage the mining operation at the Monchetundra project, and to work as the group's representative during the design and build phase of the project by Chinese mining group Sinosteel Corp.
On Monday, Eurasia said a financing structure with Lemuria would put it in a safe position and would be a natural hedge for the project risks, although at this stage said there can be no guarantee a transaction will proceed.
Eurasia said a loan of 85% of the estimated project cost is covered by a Sinosteel loan facility that will sit on Sinosteel's balance sheet until the project is up and running, but a balance of USD26.0 million is required for completion of the project.
Due diligence will commence immediately, Eurasia said.
"We are excited by this opportunity to further reduce the risk on the development of the Monchetundra project," said Managing Director Christian Schaffalitzky.
"The royalty structure works by providing capital upfront to advance the development and is repaid from the mine revenue streams. This is another option being considered in seeking the best way forward for Eurasia," Schaffalitzky said.
Shares in Eurasia were down 2.2% at 0.660 pence on Monday morning.
By Hannah Boland; [email protected]; @Hannaheboland
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