Serabi Gold secures convertible loan facility

(ShareCast News) - Serabi Gold said major shareholder Fratelli Investments Limited has agreed to provide it with an interim unsecured short-term working capital convertible loan facility of $5m (£3.4m). The Brazil-focused gold mining and development company said the loan is for a period expiring on 31 January 2017 and the facility may be drawn-down in up to three separate instalments of an initial $2m and two further instalments of $1.5m each.The loan is unsecured and subordinated to the company's existing loan facilities, including the secured loan facility arrangement provided by the Sprott Resource Lending Partnership, the outstanding balance of which amounted to $4m as at 22 December.Chief executive officer Mike Hodgson said: "Serabi is a high grade gold producer, targeting to achieve lower than average all-in sustaining costs per ounce, and this is critical, faced as we are, with the recent weakness in the gold price."Hodgson said the group was facing strong economic headwinds at a time when it has continuing commitments to increase throughput through the process plant as well as development expenditure to bring the Sao Chico Mine into full production."This has restricted the company's ability to build up its cash reserves. To ensure we can remain on track with our expansion and development plans, this convertible loan facility...gives the company the ability to complete its current development programmes by the early part of the second quarter of 2016 and thus achieve optimal gold production rates as quickly as possible."Serabi does not expect it will be necessary to draw down the full extent of the convertible loan facility.At 0854 GMT, shares were up 3.6% at 2.72p.