Larvotto Resources (ASX:LRV) has received a US$4 million ($6.2 million) offtake pre-payment pursuant to a deal signed with Wogen Resources and investment manager Xcelsior earlier this month.
On 2 December, the companies announced a binding deal for the sale of antimony concentrate produced during the first seven years of mining at Larvotto’s Hillgrove Project in New South Wales.
The deal is supported by the US$4 million facility with Xcelsior, which will be used to finalise a Definitive Feasibility Study underway at Hillgrove and fund ongoing exploration programs.
As such, Xcelsior will be issued US$600,000 in shares representing a 75% premium to Larvotto’s 15-day volume-weighted average price.
“Completing the offtake agreement with Wogen is another significant milestone for the Hillgrove Project as it progresses towards production,” Larvotto’s Managing Director Ron Heeks said earlier this month.
“The extensive (due diligence) process undertaken by Wogen and Xcelsior included site visits by Wogen/Xcelsior staff and other independent experts. It provided a strong endorsement of the project’s quality and potential.”
With the pre-payment secured, it’s a welcome addition to the $21.3 million in funding that came from the first tranche of a recent placement and the exercise of options. Larvotto’s cash balance now stands at $27.5 million, with another $16.7 million to come pending the release of the second tranche of the placement.
The company says the antimony concentrate produced at Hillgrove will be sold to Wogen, which for the last 50 years has focused on the onward selling and distribution of critical metals, ores, concentrates, and mineral sands.
Gold doré bars will also be produced for direct selling to a refinery, while the gold concentrate produced will be sold to a specialist offtake company.
In Larvotto’s 2 December announcement, Heeks noted that the company is looking to leverage the strength of the current gold concentrate market to secure an offtake partner.
“A thorough evaluation of all options is underway with numerous counterparties and we look forward to updating our shareholders once an agreement is completed,” he said.
Beyond gold and antimony, Larvotto will soon begin metallurgical testwork to produce a tungsten concentrate by-product, since the Hillgrove orebody hosts tungsten mineralisation that had proven sufficient enough for previous mining activity.
Located east of Armidale in northern NSW, the Hillgrove Project spans 254km2 and hosts a resource estimate measuring 1.7 million ounces @ 7.4 grams per tonne of gold-equivalent. According to a Prefeasibility Study released in August, Larvotto is targeting annual production of at least 80,000 ounces a year.
In addition to Hillgrove, the company also holds the Mt Isa Copper-Gold-Cobalt Project in Queensland, the Eyre Project in Western Australia, and a gold exploration project near Ohakuri in New Zealand’s North Island.
Write to Oliver Gray at Mining.com.au
Images: Larvotto Resources
