Mandalay Resources is set to raise up to C$60m ($45.2m) through a financing transaction to fund working capital requirements of its Costerfield and Björkdal projects.

The transaction will comprise a marketed public offering of up to C$50m ($37.6m) of subscription receipts (public offering) and a $8m convertible bridge loan from investment fund CE Mining Fund III’s affiliate.

Mandalay plans to use the net proceeds of the financing to fund development work at Costerfield gold-antimony operation in Australia, as well as tailings upgrade and capital requirements at Björkdal gold mine in Sweden. Proceeds will be used for debt reduction.

Three of the company’s shareholders have indicated their support for the public offering and have agreed to invest.

CE Mining will invest up to $12m in the public offering on the same terms as other investors.

“The financing provides the capital required to ensure that we execute the high-grade Youle vein development programme.”

Mandalay Resources president and CEO Dominic Duffy said: “In particular, the financing provides the capital required to ensure that we execute the high-grade Youle vein development programme.

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“This financing will also allow us to fast track the exploration and development of the Aurora zone at Björkdal, where initial drilling has indicated significantly higher overall grades and thicknesses than Björkdal’s average reserve grade and mineral thicknesses.

“We also intend to fund further exploration activities at both Costerfield and Björkdal, following up on particularly promising near-mine prospects that emerged out of exploration drilling work completed in 2018.”

Set to improve Mandalay’s financial situation, financing will allow the company to continue to execute its current business plan.