Pinnacle Appoints Auramet Capital Partners, L.P. as Lead Project Financier for El Potrero Project
Pinnacle Silver and Gold Corp. (PINN) has entered into an agreement with Auramet Capital Partners to arrange or provide up to US$5 million in non-equity project financing for its El Potrero gold-silver project in Mexico. The deal grants Auramet a seven-month exclusivity period to conduct due diligence and review operational and financial progress toward a financing deal. While Auramet holds a right of last offer, it is under no obligation to fund the project.
The agreement includes standard non-solicitation clauses and stipulates a break fee of US$400,000, which is payable if Pinnacle accepts a competing offer during the exclusivity period. Auramet Capital Partners, L.P. is described as a private precious metals merchant and financier.
El Potrero is located in the Sierra Madre Occidental near four operating mines and features a previously operational 100 tpd plant that can be refurbished for near-term production. Underground delineation drilling is currently in progress at the site. Metallurgical testing indicates robust head grades of approximately 7.7 g/t gold and 116 g/t silver, with potential recoveries estimated at greater than 97% for gold and approximately 70% for silver.
A feasibility study has been completed for a 3.3 km powerline extension, while baseline studies for water licenses and other permits are underway. Community agreements are in various stages of completion. Pinnacle aims to earn an initial 50% interest upon commencing production, with the goal of increasing ownership to 100% (subject to a 2% NSR) using generated cash flow to minimize shareholder dilution.
Robert Archer, Pinnacle’s President & CEO, commented on the partnership. “This agreement is a significant step forward and we sincerely appreciate the support of Auramet as we advance El Potrero towards production,” Archer stated. “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. 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.”