LONDON (ShareCast) - (Sharecast News) - Brazil-focussed gold mining and development company Serabi Gold announced on Tuesday that it has agreed with Greenstone Resources II to extend the period during which it can draw down on the $12m (£9.21m) convertible loan facility by six months.
The AIM-traded firm first announced the facility on 23 April, with the original period during which it could draw down funds due to expire on 31 December.

After that, any funds that had not been drawn down would no longer be available.

On Tuesday, Serabi said it and Greenstone had now agreed to extend the availability period to 30 June 2021.

All of the other terms of the convertible remained unchanged, and there was no consideration payable to Greenstone for the variation.

As at 3 August, Serabi said it had drawn down $2m of the convertible, and made payments of $2.5m to Equinox Gold for the $12m payment obligation for the Coringa gold project.

After those payments, the balance of the outstanding consideration amounted to $9.5m.

Under the arrangements agreed with Equinox, Serabi said it would continue to make payments of $1m per month, until Covid-19 restrictions on travel to and within Brazil are lifted./

At that time, any remaining balance of the outstanding consideration would become due within six weeks.

"Extending, by six months, the period in which we can draw down on the convertible, will relieve pressure to draw down funds earlier than might otherwise be necessary and avoid incurring additional debt under the Convertible that may ultimately not be required," said chief executive officer Mike Hodgson.

"This is excellent news for the company and its shareholders"

Hodgson said that, despite the Covid-19 pandemic, the company had continued mining operations at the Palito Complex, and with the gold prices that it had benefited from during the second quarter, it was able to pay down the remaining $3.5m of the loan with Sprott Resource Lending Partnership, while maintaining its cash position.

"Despite lower production levels, the second quarter was one of our best ever quarters from a cash flow perspective.

"Greenstone provided Serabi with the convertible as a means to help ensure that the Company was able to complete the acquisition of the Coringa gold project.

"With the gold price looking set to be maintained, the Sprott loan now repaid and projected production levels, we currently anticipate that Serabi can fund the $1m per month instalments that are due to Equinox Gold for Coringa, at least in the near term, from the cash flow generated from on-going operations."

At 1206 BST, shares in Serabi Gold were up 2.03% at 90.3p.

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