El Tigre Silver Corp. (CVE:ELS) (OTCQX:EGRTF) is raising $1.5 million through a non-brokered private placement financing, the company announced late Monday.
The placement will consist of up to 6.0 million units at a price of 25 cents apiece. Each unit will be made up of one common share and one half of a share purchase warrant, with every warrant entitling the holder to acquire an additional share for a period of two years at a price of 38 cents each.
The company said the proceeds would be used to continue exploration at its El Tigre property in Mexico, and for general working capital needs.
El Tigre holds the rights to 100% of nine mineral concessions, eight of which comprise 215 sq km in the Sierra El Tigre, north eastern Sonora, Mexico, known as the El Tigre property. The additional 32-hectare claim is separate from its flagship asset.
El Tigres business plan has two key components. The first is to build a processing facility to recover silver and gold from a large tailings pile, and the second is to explore and develop a large disseminated gold and silver zone associated with the El Tigre vein system.
Late last year, the junior explorer chose to option into the extensive surface tailings that resulted from the former Lucky Tiger mine in the Sierra El Tigre, as part of an agreement signed with a private owner in 2011. Under the terms of that deal, the company had up to two years to evaluate the tailings, which are located on its El Tigre concessions, and design a procedure to extract the contained silver.
“We are confident to be moving forward with our early production project at El Tigre,” said CEO Stuart Ross last November. “The past two years of evaluation culminated in a very positive prefeasibility study that provided a comprehensive technical and economic analysis of the selected development option for the reprocessing of the tailings material based on an estimation of the mineral resources and reserves contained within the tailings material.”
“The revenue from production will allow El Tigre to continue to develop the in-situ resources on the property with minimized need to go to the equity markets.
Its plan is to quickly generate cash flow from the tailings pile of the old Mexican mine, which will fund the further exploration and development of its flagship resource. Its first order of business is to build the processing facility to recover the precious metals from the tailings pile, which contains almost 1.4 million tonnes of material a result of 35 years of prior production.
The prefeasibility study on the tailings operation, based on a 400-ton per day mill, estimated a net present value of about $10.9 million using a discount rate of 8%, as well as a gold price of US$1,289 per ounce and a silver price of US$25 per ounce. The after-tax rate of return was pegged at 53%, with overall initial and sustaining capex estimated at just $6.2 million.
The private placement announced yesterday is still subject to regulatory approvals.
