Variscan Mines has locked in a A$1 million convertible loan note facility to accelerate exploration and development at its Novales-Udías Zinc Project in northern Spain. This funding underpins the company’s strategy to restart production at the high-grade San Jose Mine.
- A$1 million unsecured convertible loan note facility secured
- Flexible drawdown with notes convertible at 20% discount to VWAP
- 10% annual coupon paid in shares, with price caps and floors
- Funding supports metallurgical, geotechnical test work and mine restart study
- Novales-Udías Project holds 3.4Mt at 7.6% zinc and 0.9% lead resource
Funding Boost for Novales-Udías Zinc Project
Variscan Mines Limited (ASX – VAR) has announced a significant step forward in financing its Novales-Udías Zinc Project in northern Spain, securing a binding term sheet for a A$1 million unsecured convertible loan note facility. This funding arrangement, provided by a syndicate of mining-focused professional investors, is designed to enhance the company’s financial liquidity as it advances exploration and development activities.
The facility allows Variscan to draw funds flexibly up to the A$1 million limit, with each dollar drawn represented by a convertible note. These notes carry a 10% annual coupon paid in Variscan shares and can be converted into ordinary shares at a 20% discount to the 15-day volume weighted average price (VWAP), subject to a conversion price floor of A$0.008 and a cap of A$0.015 per share. This structure offers investors downside protection while aligning their interests with the company’s growth prospects.
Strategic Implications and Project Outlook
Managing Director Stewart Dickson expressed confidence in the backing from sophisticated investors, highlighting it as a strong endorsement of both Variscan and the Novales-Udías Project. The company’s dual-track strategy combines readiness to restart mining operations at the San Jose Mine with ongoing high-impact exploration, aiming to unlock value from one of Europe’s highest-grade zinc deposits.
Key upcoming milestones include results from metallurgical and geotechnical test work, which will feed into the Mine Re-Start Study, as well as further assay results from underground drilling at the Udías Mine. These developments are critical to advancing the project towards production resumption.
Project Highlights and Regional Context
The Novales-Udías Project boasts a JORC-compliant mineral resource estimate of 3.4 million tonnes grading 7.6% zinc and 0.9% lead, positioning it as a significant zinc asset in the Basque-Cantabrian Basin. The project benefits from proximity to existing infrastructure, including the nearby world-class Reocin Mine and the Glencore-operated San Juan de Nieva zinc smelter approximately 80 kilometres away.
Historic mining at the San Jose Mine has demonstrated exceptionally high-grade zinc mineralisation, with some pods reaching grades exceeding 30%. The project’s granted mining tenements and supportive local community further underpin its development potential.
Looking Ahead
While the facility remains undrawn at present, it provides Variscan with a flexible financial tool to accelerate critical development activities. The convertible loan note’s terms balance investor protection with potential equity upside, reflecting confidence in the project’s trajectory.
As Variscan progresses through metallurgical testing, geotechnical assessments, and drilling results, the market will be watching closely for signs of a viable mine restart and the potential for production to resume at this strategically located zinc project.
Bottom Line?
Variscan’s new financing facility sets the stage for pivotal development milestones that could reshape its zinc production outlook.
Questions in the middle?
- When will Variscan initiate drawdowns under the convertible loan note facility?
- How will metallurgical and geotechnical test results impact the Mine Re-Start Study timeline?
- What are the potential dilution effects if all convertible notes are converted at the capped price?