Telson Mining has signed a letter of intent with a group of syndicates to secure financing of up to $25m to complete the construction at its Tahuehueto gold mine in Mexico.

The company plans to also use the proceeds to meet debt service obligations and for working capital purposes.

The group of syndicates consists of Accendo Banco, Empress Royalty Corp & Endeavour Financial.

This Accendo Syndicate is investing via debt, a silver stream, and equity.

Accendo is offering a loan of $12m, $500,000 of which has so far been advanced.

The mining firm would secure another $5m from a stream agreement for the first 1.25 million payable ounces of silver production. A further $8m will be secured through a private placement.

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Meanwhile, Telson, the Accendo Syndicate and Trafigura Mexico have also executed an MoU.

This MoU provides a non-binding framework with terms for the parties to negotiate definitive agreements for the proposed deals that include the potential restructuring of Telson’s debt obligations to Trafigura and Nyrstar Canada.

The capital expenditure investment required to finish the Tahuehueto mine construction and commissioning is estimated to be $15.4m. This amount comprises $12.6m for equipment and construction, including a 15% contingency, and an additional $2.8m as working capital to support the operations until the mine can generate a positive cash flow.

Upon closing of the private placement, which is part of the financing, work on the project will commence immediately.

Telson CEO Ralph Shearing said: “This funding package now allows Telson to immediately reinitiate construction at the Tahuehueto mine site, after which we expect to rapidly advance construction targeting to commence initial pre-production within ten to 12 months and full-scale production 12 to 14 months after funding.”

The Tahuehueto project is located within the Sierra Madre mineral belt in the northwestern state of Durango.

This belt features most of the country’s active exploration and development projects.

Given that the final funding is in place now, the firm expects to complete the construction of a 1,000tpd processing facility to generate gold, silver, lead and zinc in concentrates within its own on-site mineral processing facility.