Orion Gold (ASX: ORN) has finalised a $1.5 million loan agreement with the company's major shareholder, Silja Investment.
The funding injection allows Orion to continue the current 2400 metre diamond drilling program to test high priority targets at New Dawn – Toombon, Longfellow’s and Happy Go Lucky.
Providing a boost to the Victorian based targets are the location, which are hosted on the recently reinterpreted Cohen’s trend.
This trend includes the major historical mines in the Walhalla-Woods Point goldfield, with the recorded gold production of around 4 million ounces.
The Cohen’s reef system, which was mined in the late 1800's to early 1900's, has the states highest production from a single shoot at around 1.5 million ounces at a very high head grade of 40 grams per tonne gold.
Orion said after 40 years of mining many basic features of the system remained unknown or poorly defined, with 2010 drilling and interpretation delivering a breakthrough in the understanding of structural controls on mineralisation at Cohen’s, and the newly interpreted regional Cohen’s trend.
Terms of the facility
Silja Investment has committed to convert cash drawn down under the facility to shares, as part of a possible future capital raising subject to various conditions.
These conditions include shareholder approval; the capital raising including Silja’s allocation being a minimum of $1.5 million; the capital raising issue price of shares not being less than $0.01 per share; and Silja’s participation in the capital raising being an amount equivalent to Silja’s proportionate shareholding in the company - which is around 27%.
The facility expires on 30 June 2013, and the company would be required to repay the facility in cash on that date to the extent the loan balance has not been converted into shares by then.