Operations at the Sugar Zone mine have been suspended since March 30. Courtesy of Harte Gold.

On July 1, Harte Gold announced it will receive up to US$30 million in financing from Appian Capital Advisory LLP to restart its Sugar Zone mine near White River, Ontario, this month.

Under an agreement to be approved by the Toronto Stock Exchange, Appian Capital will receive a private placement of 9.5 million Harte Gold shares at a value of US$1 per share. The financier will also provide the company with a one-time US$18.5 million credit facility and receive a net smelter royalty of 0.5 per cent of gold produced at the mine in exchange for US$2 million.

“Given the company’s current financial condition, the proposed transaction provides the best financing alternative available to the company, limiting up-front dilution, providing sufficient funding to cover cash flow and capital requirements on start-up and allowing for immediate capital to accelerate the restart of operations,” said Joseph Conway, chair of the board of Harte Gold.

Related: Harte’s newly opened Sugar Zone gold mine in northern Ontario expected to have a 12-year life

On March 30, Harte Gold suspended all non-essential operations at the Sugar Zone mine to protect its workforce and the surrounding communities from the COVID-19 pandemic. According to the company, since the mine is its only source of operating income, the mine’s closure meant that the company was financially unable to restart mining operations on its own.

Initial production at Sugar Zone began in January 2019. According to the company, the mine has an estimated mineral resource of 1.1 million ounces of contained gold and an inferred resource of 558,000 ounces of contained gold, and has an expected mine life of 12 years.

The company also released an updated 18-month plan for the mine, including an estimated 2020 production of 20,000 to 24,000 ounces of gold. The original 2020 guidance at the 800-tonne-per-day mine was 42,000 to 48,000 ounces of gold at an all-in-sustaining cost of US$1,475 to US$1,650 per ounce. In 2021, the company estimates that the mine will produce 60,000 to 65,000 ounces of gold at an all-in-sustaining cost of US$1,100 to US$1,300 per ounce.