Dateline receives terms for $US5m in development funding for stalled Gold Links mine in Colorado USA

Gold production hopeful Dateline Resources (ASX:DTR) flagged its receipt of a funding term sheet for US$5m (A$7m) to further develop its Gold Links mine from private lender Madison One Cuso (MOC) on Friday. 

MOC is an American credit union focusing on small businesses managing projects in rural areas. 

“Funding is subject to an 80% guarantee from the United States Department of Agriculture (USDA),” the company wrote. 

MOC ultimately accesses Federal Loans on behalf of clients in a partnership with the government, and then chips in some cash itself. 

This is not the first time MOC has shown an interest in Gold Links. The lender has previously funded US$10m for the project. 

In November last year, Dateline management highlighted it was seeking a JV partner for its Gold Links development to ultimately enhance cash flows supporting the project. 

JV partner on the cards 

On Friday, company management also revealed its process to find such a partner is progressing. 

“Discussions are advanced with a potential Joint Venture partner, and we are working on finalising an agreement as soon as possible,” Dateline MD Stephen Baghdadi said. 

Regarding the US$5m, Baghdadi was equally optimistic. 

“This is a positive development for the Company and is the result of having a good working relationship with our bankers and confidence in the potential of the Gold Links project.” 

Underground capex the issue 

An existing underground mine is present at Colorado and the company has already made sales of gold concentrate, but the underground mine needs maintenance. 

Underground mines are more expensive than open cut mines and the small cap found itself overseeing Gold Links in a turbulent 2022 economic environment. 

According to the term sheet, the interest rate attached to the loan would be 10.25% and extends over a ten-year term.

This, on its own, would unlikely be enough to bankroll development of underground assets on its own right, so the JV partner search remains imperative. 

Mortgage on assets as security 

“The security attached to the loan is a mortgage over the real property assets in Colorado and a guarantee from Gunnison Gold Pty Ltd,” the company added. 

Gunnison is an Australian-registered company active in the US with a few North American Limited Liability Companies (LLC) on its books. Dateline has worked with it since 2016. 

Gunnison Gold is named after Gunnison County, Colorado, where Dateline’s Gold Links mine is located. 

With shares up 14% in the first hour of trade, will today's news contribute to a turnaround in sentiment?

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