Lunnon Metals has locked in a $6 million secured loan to fund critical pre-production activities at its Lady Herial gold project, marking a key step toward mining commencement.
- Secured $6 million term loan from Bedrock Alpha Credit Income Fund
- Funding targets working capital, pre-production, and site establishment costs
- Loan repayable eight months post-drawdown, secured against project assets
- Mining and site clearing underway at Lady Herial gold project
- Recent feasibility study projects over $45 million pre-tax free cash flow
Funding Secured for Lady Herial
Lunnon Metals Limited (ASX – LM8) has taken a decisive stride forward by securing a $6 million term loan facility from the Bedrock Alpha Credit Income Fund. This funding is earmarked to support the company’s working capital needs and cover pre-production and site establishment expenses at the Lady Herial gold project in Western Australia.
The loan, structured as a single draw facility, is repayable in full eight months after drawdown. It is secured against key project assets including the Lady Herial tenements, a dedicated project bank account, and Lunnon Metals’ rights under the Ore Purchase Agreement with St Ives Gold Mining Co. Pty Ltd. Notably, the facility does not impose hedging requirements, offering the company financial flexibility during this critical phase.
Advancing Toward Production
Mining activities at Lady Herial have already commenced, with clearing and site establishment underway. The first ore delivery to St Ives Gold Mining is scheduled for later this month, triggering payments under the Ore Purchase Agreement and marking the transition from development to production.
Managing Director Edmund Ainscough emphasised the strategic importance of the loan, describing it as a “prudent and disciplined” approach to maintaining strong working capital during the early stages of development. He highlighted Bedrock’s tailored funding approach as a strong endorsement of Lunnon Metals’ de-risking strategy and confidence in the project’s potential.
Robust Project Economics
The recent feasibility study underpins the project’s financial promise, projecting over $45 million in pre-tax free cash flow at current gold prices. This robust outlook reinforces Lady Herial’s quality and viability, supporting Lunnon Metals’ focus on safe, efficient mine plan execution to unlock shareholder value.
While the announcement does not disclose detailed loan terms beyond repayment timing and security, it confirms that all material assumptions from the feasibility study remain unchanged, providing continuity and confidence in the project’s forecast production and financial metrics.
A Tailored Financing Solution
Bedrock Alpha Credit Income Fund specialises in providing bespoke, non-dilutive financing to mid-market natural resources projects often underserved by traditional lenders. Their involvement signals growing interest and confidence in the natural resources sector’s evolving financing landscape, particularly for projects like Lady Herial that are moving into production.
With approvals in place and funding secured, Lunnon Metals is well-positioned to advance Lady Herial through its critical early production phase, setting the stage for value creation in the months ahead.
Bottom Line?
Lunnon Metals’ secured funding and operational progress at Lady Herial set the stage for a pivotal production ramp-up and value realisation.
Questions in the middle?
- How will gold price fluctuations impact Lady Herial’s cash flow projections?
- What are the detailed terms and interest costs associated with the Bedrock loan?
- Will Lunnon Metals pursue additional financing or partnerships as production scales?