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SRG Mining inks MOU, secures US$5M in funding for Lola graphite project

SRG Mining Inc. signed a memorandum of understanding with a U.S.-based industrial firm over the development of its flagship Lola graphite joint venture in Guinea with Sama Resources Inc.

The unnamed company, which has experience in West Africa, agreed to acquire 8.3 million of the 24,658,267 SRG Mining shares held by 35.5%-owner Sama Resources for US$5 million in five tranches, with closing expected by Dec. 15.

Under the MOU, SRG Mining and the industrial company will assess the potential to cooperate on the Lola graphite development, looking at options including debt financing, energy production at the site and mining services. No consideration is payable under the preliminary deal, with terms to be discussed upon the identification of a joint opportunity.

SRG Mining said Aug. 8 that it secured a concurrent credit facility from Sama Resources of up to US$5 million and a C$1 million bridge loan, both bearing an interest rate of 10% per annum and repayable within 12 months. The facility can be converted in cash or shares at a conversion price of 91 Canadian cents per SRG Mining share.

An early July feasibility study on the Lola project defined an after-tax net present value of US$159 million, at an 8% discount rate, with a 21.2% internal rate of return and a 3.9-year payback period.