Erdene Resource Development Corp. secured an C$8 million financing package led by the European Bank for Reconstruction and Development to develop the Khundii gold project in Mongolia.
The funds will be used to support a feasibility study and a front-end engineering design, for exploration and acquisitions to add resources, and for general working capital.
The company said Oct. 15 that it also entered into a definitive agreement with the bank for a US$5.0 million convertible loan that has an interest rate of 10% per annum and will mature in 36 months.
The loan, which has a conversion price of 20 Canadian cents per share, can be prepaid 24 months from the date of the initial advance, delivery of a National Instrument 43-101-compliant bankable feasibility study, or a change of control of Erdene, whichever happens first.
In addition, Erdene plans to raise C$1.6 million through a private placement of 8 million units at 20 cents apiece. Each unit will consist of one share and one-half of a warrant exercisable at 30 cents apiece for two years. Closing is expected by Oct. 25.
A December 2018 preliminary economic assessment on the project generated a posttax net present value, discounted at 5%, of US$99 million, a 56% internal rate of return and a two-year payback period.