Canada-listed Otso Gold has delayed the July 2020 restart of operations at its namesake mine in Finland, citing the current Covid-19 travel restrictions and physical distancing requirements.
The company, which wholly owns the Otso gold mine near the town of Raahe, however, continues to focus on an expedited restart assuming the necessary preparatory work can be completed, with the latest anticipated restart date being April 1, 2021.
In a recent shareholder update, Otso says that although it will try to expedite its restart date, it is mindful of not repeating the prior management’s error of beginning mining without sufficient understanding of the mine plan and in the winter months.
Otso’s immediate priorities include the completion of the infill definition diamond orientated drill programme to define the mining blocks, the publishing of a second resource update, a new feasibility study and the completion of preparatory works for production. The company currently has 778 samples ready to go for fire assay and inductively coupled plasma.
Meanwhile, Otso has also executed an investment agreement with Alumina Partners (Ontario), enabling it to access, subject to a mutual agreement on terms, up to $8-million in equity funding.
The company has closed an initial $200 000 tranche with funds received pursuant to the investment agreement and an additional $100 000 from other arm’s length subscribers. Accordingly, the company has issued 5-million units at $0.06 a unit. Each unit is comprised of one common share and one common share purchase warrant. Each warrant is exercisable into one further common share at a price of $0.096 a share for a period of 60 months. In connection with this offering, the units bear a four months and one day resale restriction.
The investment agreement provides Otso with a stand-by liquidity facility, which it highlights as a particularly important achievement in the current global climate, and flexibility in capital raising.
The company is focused on a holistic solution comprising both debt and equity financing with a view to reducing dilution and increasing shareholder value by returning the mine to production. Otso stresses it will only draw down funds to maintain and progress operations while it finalises a holistic solution.
Otso is also continuing to progress longer-term financing solutions leveraging its project and its two-million-ton-a-year processing plant and related infrastructure. While its capital raising has been delayed by the Covid-19 crisis, Otso remains confident that it will finalise a largely debt-based solution to provide it with the necessary funds to return the Otso gold mine to gold production.
In other news, the company has recently appointed a Canada-based CFO Mark Gelmon, who has significant experience with publicly-traded mining companies with international subsidiaries and being a member of a management team focused on returning a mine to production and implementing industry-specific best practices.
The company has also recently appointed Christopher Towsey to serve as an independent board member. Towsey brings significant additional expertise as a geologist with extensive experience and further independence and transparency to the board of directors. In addition, Thomas Fenton of Aird & Berlis has been appointed to act as corporate secretary.
EDITED BY: MARIAAN WEBB
CREAMER MEDIA SENIOR RESEARCHER AND DEPUTY EDITOR ONLINE