Toronto-listed Troilus Gold has announced a $35-million loan with precious metals merchant Auramet to support its near-term development activities at its namesake mine in Quebec.

Proceeds of the loan will be used for final permitting, early works preparation and advancement towards full project financing. 

“In addition to Troilus’ already strong balance sheet and the anticipated inflow from more than C$16-million of in-the-money warrants, this loan provides Troilus with enhanced financial flexibility at a lower cost of capital than other available alternatives, including equity," said CEO Justin Reid. "It positions us to aggressively advance early pre-development initiatives, complete permitting, and finalise our overall project financing."

He added that Auramet, which is its primary project financing adviser, has been an invaluable partner throughout the process. "Their involvement not only brings deep expertise, but also aligns their interests directly with those of Troilus and our stakeholders as we work toward successful financial completion within our targeted timeline.”

The loan has an initial term of one year and is structured to be drawn down in tranches to support Troilus’ working capital requirements pending the completion of project financing for the construction of its Troilus project.

An initial tranche of $15-million was advanced to Troilus upon execution of the loan agreement. The remaining $20-million will be available for drawdown by Troilus beginning 90 days from the date of the initial advance and subject to the satisfaction by Troilus of certain conditions precedent.

The loan bears 1% monthly interest on the outstanding balance, including principal and accrued interest, and is secured by a negative pledge on the company’s assets, a security interest and a hypothec charging personal property of the company. 

The loan repayment may be accelerated in certain specified circumstances and Troilus may also voluntarily prepay the loan together with all accrued and unpaid interest at any time without penalty or bonus. Troilus may extend the maturity of the loan for an additional six months upon satisfying certain conditions and the payment of certain fees, in which case the loan will bear interest at a rate of 1.25% per month during such period.