Telson Mining Corporation (CVE:TSN) (OTCMKTS:SOHFF) has moved a step closer to completing construction at its Tahuehueto mine in Mexico as it inked an updated term sheet with Accendo Banco over a US$12 million loan.
The medium-term loan facility (MTLF), which is subject to final due diligence by the bank, has a repayment term of three years and an interest rate of 13.5% a year.
"Telson's management is extremely pleased to have gained the major financial support of Accendo Banco and upon closing of the US$12 Million loan facility, the company will be in a position to advance its 100% owned Tahuehueto gold mine towards the completion of construction which we strive to achieve in early 2021," Ralph Shearing, Telson's CEO said in a statement.
Tahuehueto, in Durango state, is around 70% complete and the group is waiting for final funding to finish the processing plant and related assets to produce gold, silver, lead and zinc in concentrates from its own on-site mineral processing facility, with a design capacity of at least 1,000 tonnes per day. Telson is targeting completion of construction six to eight months after securing final funding.
Javier Reyes de la Campa, CEO of Accendo said the bank aimed to complete final due diligence to close Telson's funding within the next 1 to 2 months.
"Our technical mining team have come to know the Tahuehueto gold project well and Accendo is convinced that it is one of Mexico's premier advanced gold mines under development and will soon reach production with our bank financial assistance.
"We are committed to help Telson reach production at Tahuehueto and intend to use our financial knowledge and network within the Mexican mining industry to assist with additional funding, if required," he added.
The MTLF is repayable by Telson in 24 equal monthly payments starting 12 months after closing, and is secured by second-ranking security interest over all its assets.
As well as the loan, Accendo also intends to purchase up to US$500,000 (around C$678,800) of Telson's critical existing debt with Tahuehueto mining project's suppliers (arm's length) and has agreed to convert the debt into Telson shares based on the debt amount settled.
Accendo has also introduced investors willing to participate in an equity investment in Telson of up to C$750,000.
Accordingly, Telson intends to conduct a non-brokered private placement of up to 7.5 million units at C$0.10 each for total proceeds of up to C$750,000. Each unit consists of one company share and one half of a transferable share purchase warrant. Each whole warrant entitles the holder to acquire one further share for two years at C$0.15 per share.
The proceeds are expected to be used to advance the construction of Tahuehueto and for general working capital.
Telson Mining Corporation is a Canada-based mining company with two 100%-owned Mexican gold, silver, and base metal mining projects - Tahuehueto and Campo Morado.
At Campo Morado, the firm re-started operations on June 3 after the Mexican government recognized mining as essential to the economy.
Shares advanced over 22% on Tuesday to stand at C$0.11 each in Toronto, but had earlier been as high as C$0.14.
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