Golden Queen Mining Co. Ltd. (TSX:GQM) (OTCQX:GQMNF) (the "Company") is pleased to announce that it has entered into an agreement to secure a US$10,000,000 loan (the "Loan"). The proceeds of the Loan will be applied to the ongoing development of the Soledad Mountain Project (the "Project").
The Loan will allow the Company to commit to long lead-time items required for the crushing-screening plant and commence its Phase 2 construction program. This will permit the Project to stay on schedule with a target for the start of commissioning of the Merrill-Crowe plant during the second quarter of 2015.
The Loan will be provided by members of the Clay family including $7.5m to be provided by an investment vehicle managed by Thomas M. Clay, a Director and insider of the Company. The Loan has a twelve-month term and bears an annual interest rate of 5%, payable on the maturity date. If the Loan is repaid on a date that is less than 183 days before the maturity date, the Company will pay the Lenders an amount of 105% of the principal amount plus interest on the principal amount at the rate of 5% per annum accrued to the date the Loan is repaid.
No finder's fee or commission will be paid in connection with the Loan. Closing of the Loan is subject to the approval of the Toronto Stock Exchange.
Phase 2 Construction:
The Phase 2 construction is scheduled to begin in January 2014, and will run concurrently with Phase 1 construction, which is expected to be completed in February. The Phase 2 construction includes construction of the workshop-warehouse, a wash slab for washing earthmoving equipment and the assay laboratory. These facilities will be required to support pre-production mining.
The Company is also planning to complete site preparation of the area where the crushing-screening plant and the Merrill-Crowe plant will be constructed with scheduled completion in the first quarter of 2014.
Work is continuing with detailed engineering for the facilities for the Project.
The estimated cost of Phase 2 construction is between $5 and $6 million. Phase 2 construction will take from three to six months and will overlap with the Phase 3 construction program, which is expected to start during the second quarter of 2014.
Manpower:
The Company expects to build up the management team on site during the first quarter of 2014. This will include a Plant Operations Manager, Purchasing Manager, Human Resources Manager and support staff.
Project Financing Update:
The Company is continuing to evaluate various financing options for the Project, including equity, debt, and other alternatives. The Company aims to secure the remaining funds required to complete the construction of the Project in the first quarter of 2014. The Company estimates that construction can be completed in 15 to 18 months once project financing has been secured.
About Golden Queen Mining Co. Ltd:
The Company is developing a gold-silver, open pit, heap leach operation on its fully-permitted Soledad Mountain property, located just outside the town of Mojave in Kern County in southern California. The Soledad Mountain Project will use conventional open pit mining methods and the cyanide heap leach and Merrill-Crowe processes to recover gold and silver from crushed, agglomerated ore.
Source: Golden Queen Mining Co. Ltd.
