Rio Alto secures $50M financing

Rio Alto Mining (rio-v) is raising $50 million in a private placement to fund its La Arena copper-gold project 480 km northwest of Lima in Peru.
A syndicate of underwriters led by GMP Securities and including Scotia Capital, Clarus Securities and Stonecap Securities will buy 24.4 million Rio Alto shares at $2.05 apiece on a bought-deal basis.
The underwriters have an over-allotment option to buy an additional 3.6 million shares at the offering price within 48 hours of the closing date. If the option is exercised in full, Rio Alto will raise another $7.5 million for total proceeds of $57.5 million.
The majority of the funds will go to advance the La Arena project where construction started in August 2010 following the approval of an environmental impact study.
Run-of-mine ore is planned to be loaded onto the pad in January with irrigation starting in February. Commissioning of the processing plant will begin in March and gold doré production is scheduled for late April.
So far, 100% of the earthworks related to the construction of the 9-hectare run-of-mine Pad 1A have been completed. About 70% of the pad has been lined with geomembrane.
La Arena is a low-grade porphyry project that contains 2.8 million oz. gold and 1.7 billion lb. copper in the indicated category, and 1.2 million oz. gold and 1.2 billion lbs. copper in inferred.
Mining at La Arena will be based on a conventional truck and shovel, open-pit mine design with run-of-mine dump leaching of gold oxide material during the first seven years of production. The copper/gold sulphide material would be mined from an open-pit and be treated by milling, flotation, and sulphide concentration of the copper/gold during years four to 25.
Barrick Gold’s (abx-t, abx-n) Lagunas Norte gold mine is 15 km west of La Arena while Newmont Mining’s (nmc-t, nem-n) Yanacocha gold mine sits 100 km to the north.
The project can be accessed via a 160-km national roadway from the coastal city of Trujillo directly east towards Huamachuco, passing through Chiran, Shorey/Quiruvilca and the Alto Chicama project owned by Barrick Gold.
Rio Alto was trading at $2.32 per share at presstime in Toronto. Over the last year, the stock has traded in a range of 34¢-$2.34.