JOHANNESBURG (miningweekly.com) – Gold exploration and development firm Excelsior Gold on Monday announced new funding arrangements that could provide up to $11.35-million to advance the company’s mine development and resources growth strategy.

The ASX-listed junior had entered into binding funding agreements with fellow-listed GWR Group and existing shareholder group Farrah Property Securities to provide additional financing for its Kalgoorlie North gold operations. The binding agreements provided a guaranteed financing solution of about $5-million and could potentially raise up to $11.35-million of new funds at an average price of $0.05 a share.

Resources house GWR Group had agreed to a strategic investment and would initially provide $2.25-million, which would be followed up by a partially underwritten nonrenounceable one-for-six rights issue to raise a further $5.1-million.

The immediate funding from GWR would consist of a $1.59-million loan and $0.66-million convertible loan. Subject to certain conditions and shareholder approval, GWR had additional rights to participate in funding initiatives with a potential to raise a further $6.87-million, which would deliver the resources house a substantial cornerstone interest of up to 17.8% in Excelsior Gold.

GWR had committed to take up its full entitlement in the rights issue and to underwrite a further 25-million shares. Farrah had also committed to underwriting the rights issue for $2-million and to take up its full entitlement in the issue. The combined underwriting and take up of entitlements by GWR and Farrah had the potential to raise A$3.8-million in the rights issue.

Farah had also agreed to provide immediate funding by way of a $0.5-million loan, convertible to shares at a conversion price of $0.05 a share.

“The company welcomes the investment by our new partners GWR and the ongoing support from Farrah, which provides immediate access to working capital to progress mine development at Zoroastrian and to advance exploration drilling on the Zoroastrian mineral system and in new resources areas,” commented MD David Hamlyn.

He added that Excelsior Gold would benefit from the technical and financial capabilities of GWR.

"This cornerstone funding agreement with Excelsior allows GWR to leverage exposure to the gold sector via taking a meaningful position in an emerging gold producer. This funding package provides Excelsior increased financial capacity to develop the Kalgoorlie North deposits in a timely and efficient manner," commented GWR CEO Craig Ferrier.

Mining started at Excelsior Gold's Kalgoorlie North operations in November 2015, with ore processed through the nearby Paddington processing plant operated by Zijin subsidiary, Norton Gold Fields. Excelsior Gold had defined 22 resource areas with total current measured, indicated and inferred mineral resources of 24.53-million tonnes at 1.76 g/t of gold for 1.38-million ounces of gold.