The project is a previously producing open pit and the first gold pour is earmarked for November 27 of this year. The funding comes from PFL Raahe Holdings (PFL), an investment vehicle controlled by Pandion Mine Finance, and comes with various terms.
PFl will provide US$3 million immediately and a further US$4 million in November this year, subject to conditions, as partial consideration for the purchase of gold under a pre-paid forward gold purchase agreement (PPF agreement) struck in November last year.
These tranches will be on top of the US$20.6 million, which was provided in December last year.
Nordic, formerly Firesteel Resources, must deliver to Pandion a further monthly quantity of gold at a price equal to the then-current spot price, less a specified discount.
The company will aim to raise US$7 million via a private placing to reduce or cancel the gold deliveries, while the start date of gold deliveries under the PPF deal has been extended to January 2020 from May 2019.
Due to a recent amendment to the PPF agreement, PFL will be granted a 2.5% net smelter return (NSR) on gold production from the Laiva mine and will be issued with 36.5 million Nordic Shares, representing 19.99% of the capital.
Nordic will make a payment of US$1,500,000 to PFL within six months of entering into the amendment to the PPF agreement.
"The gold forward sale initially enabled our small company with a market cap of around $3,000,000 to acquire a high-value, fully-built and permitted mine for around $25,000,000. said Michael Hepworth, the president and CEO of Nordic.
"The previous owners, Nordic Mines AB, invested €220,000,000 to build the Laiva Gold Mine.
"In addition, there is a US$155,000,000 tax loss carry-forward provision in place that the Finnish government has already approved for Nordic’s use should the company accrue taxable income.”
The company boss added: "Our financing options have significantly increased, now that the project is largely de-risked, and first gold is scheduled to be poured on November 27th, 2018."
He also noted that a PEA (preliminary economic assessment) on the project gave it an after-tax NPV (net present value) of US$69 million and a 1.7-year payback.
"As production is expected to be 67,000 ounces of gold in the first 12 months, this means that some debt is now an option and consequently we intend to refinance at more favourable terms," he added.
Nordic noted it was already in discussion with several banks and several potential strategic investors, with regard to a refinancing. The goal is to have such financing in place by May 2019.
Nordic Gold shares were unchanged in Toronto at $0.11.