Pinnacle Silver and Gold (TSX-V:PINN) has appointed Auramet Capital Partners as Lead Project Financier, providing non-equity project financing of up to US$5 million ($7.3 million) for the development of the ‘high-grade’ El Potrero Gold-Silver Project in Durango, Mexico.
Pinnacle and Auramet will jointly develop and execute a mutually approved project‑financing arrangement based on, and subject to, due diligence, operational and financial progress, and other conditions, over the seven-month exclusivity period.
Auramet has the right of last offer for project financing but is not obligated to do so under this agreement. The agreement also contains a non-solicitation clause for competing financing proposals, with a break fee of US$400,000 if Pinnacle chooses to accept any other offers.
Pinnacle CEO Robert Archer says that the agreement with Auramet is a “significant step” as the company advances El Potrero toward production.
“In keeping with our business model, our goal has been to secure a non-dilutive means of financing the development of the project in a timely fashion,” Archer says.
“Having a well-known metal trader and financier such as Auramet to partner with not only brings a lot of credibility but will give us financial flexibility without being captive to the volatility of capital markets as we move through the various stages of development.
“Having enjoyed a long-standing relationship with the Auramet team, I am confident that they will be a reliable partner going forward. By participating in our last financing, they have already demonstrated strong support for our management team, business model, and the Potrero Project itself.”
Development progress at El Potrero
Pinnacle is advancing development of El Potrero, with underground delineation drilling currently in progress. The company has run two phases of metallurgical testing showcasing ‘robust’ grades of 7.7 grams per tonne gold (Au) and 116g/t silver (Ag), with potential recoveries over 97% Au and around 70% Ag.
Pinnacle completed a Feasibility Study for the powerline extension over 3.3km at the site, with baseline studies for water and other necessary permits underway and community engagement agreements in various stages of completion.
El Potrero is located in the Sierra Madre Occidental in Mexico, within 35km of four operating mines.
The site contains high‑grade gold–silver mineralisation hosted within a low sulphidation epithermal breccia vein system developed in Lower Volcanic Series andesites.
Pinnacle notes that the property itself has been privately held for around 40 years and has not yet had systematic modern exploration conducted to date, leaving the property open with significant exploration upside.
The site has a 100 tonne per day plant on-site that is amenable to refurbishment or rebuilding and also has historic underground mine workings that can be rehabilitated at low-cost, potentially accelerating Pinnacle’s path to near-term production.
Once commencing production, Pinnacle will initially earn a 50% interest, with plans to generate sufficient cash flow to enable the further development of the project and grow the company’s ownership to 100%, subject to a 2% net smelter royalty.
Pinnacle Silver and Gold is focused on the development of precious metals projects in North and South America.
Write to Amy Rotman at Mining.com.au
Images: Pinnacle Silver and Gold
