TORONTO (miningweekly.com) – TSX-listed gold junior Dynasty Metals & Mining has found an unusual solution to its cash flow woes – by allowing striking workers at the Zaruma project, in Ecuador, to extract ore from the mine for a ten-day period ending Tuesday.

The company late on Tuesday reported that its subsidiary Elipe had reached an agreement with workers with the aim of financing a partial payment of their outstanding wages.

Midway through the first quarter, labour relations with mineworkers began to deteriorate, resulting in intermittent work slow-downs and stoppages to the end of the quarter and into the second quarter, resulting in the project being placed on care and maintenance.

Vancouver-based Dynasty advised that under the agreement, the extracted ore would be processed at local third-party mills at the workers' risk and cost, however, the company and workers' representatives would monitor processing to ensure that the ore was processed according to industry standards in order to maximise purity. They also planned to monitor the subsequent gold and silver sales, in order to ensure that sales were completed on a commercially reasonable basis, and that net proceeds were fully applied towards outstanding wages.

“We are very pleased to announce this innovative agreement reached by Elipe with workers at the Zaruma mine and look forward to achieving favourable results that will assist in our efforts in restarting operations. We believe our good faith efforts at finding solutions for our workers and restarting operations will contribute to resolving the labour interruption with workers and government officials,” Dynasty CEO Robert Washer commented.

At the end of May, a special committee of the board had appointed a financial adviser to review options regarding the financial requirements and strategic alternatives for the company. The adviser had been engaged to assist in the review as well as to manage a data room for interested parties to view the company's public and non-publicly disclosed documents and to reach out beyond the scope of management and the special committee to organisations that might consider an arrangement with Dynasty.

During the first quarter ended March 31, the company produced 2 785 oz of gold from Zaruma.

DEVELOPMENT PROJECT
In the company's efforts to pursue strategic alternatives to advance its other key projects, Dynasty announced subsequent to the end of the first quarter that it had entered into a definitive three-year agreement with mining contractor and funding partner Green Oil to advance the Dynasty Goldfield project, also based in Ecuador.

Green Oil would act as contractor for the development of specific mining concessions. To date, Green Oil had advanced the company $170 000 of a $500 000 unsecured loan commitment, which would enhance Dynasty’s liquidity while preliminary development work under way was completed.

Green Oil would focus on surface excavation on three of Dynasty's mining concessions within the Dynasty Goldfield project, each of which was fully permitted and qualified under Ecuador's special regime for small-scale mining. The designation of 'small scale' allowed for the openpit mining of up to 1 000 t/d per concession.

Within two months of starting mining activities, Green Oil would be required to excavate a minimum of 400 t/d, and 750 t/d by the start of the third month. Green Oil had the right to mine openpitable surface material only and Dynasty retained the right to explore and develop any and all underground mineralisation on the three concessions. Dynasty also retained all rights to mineralised material developed underground within or beyond the three-year term of the agreement.

This Dynasty Goldfields project had a mineral resource of about 1.1-million ounces of gold in the measured and indicated categories, contained in nearly seven-million tonnes.