Vizsla lines up Macquarie-led $220M for Panuco

[Redator]

Canadian miner Vizsla Silver (TSX, NYSE: VZLA) hired Australia’s Macquarie Bank as lead arranger of a $220 million maximum financing package for the construction and development of the Panuco silver-gold project in Mexico.

Macquarie is to act as sole underwriter of the project finance facility, keeping a 70% interest and syndicating the rest, according to a Vizsla statement released Friday. Macquarie will be responsible for coordinating the syndication process and ongoing project monitoring.

Combined with about $200 million of cash on the company’s balance sheet following an equity financing in June, “Vizsla is well positioned to fully fund the $224 million capex estimate from the Panuco preliminary economic assessment,” BMO Capital Markets analyst Kevin O’Halloran said in a note.

News of the financing package comes as Vizsla works on a feasibility study for Panuco, which it plans to finish by the end of the year. The study will help management reach a construction decision and first silver by 2027, CEO Michael Konnert told The Northern Miner in a July interview.

Large resource

Located in southern Sinaloa, near the city of Mazatlán, Panuco hosts the world’s largest undeveloped, high‑grade silver resource. It holds 13 million measured and indicated tonnes grading 2.5 grams gold per tonne and 307 grams silver for 1 million oz. gold and 127 million oz. silver. It also has 10.5 million inferred tonnes at 1.9 grams gold and 219 grams silver for 660,000 oz. gold and 73.6 million oz. silver, including lead and zinc credits.

A PEA released last year gave the project a post‑tax net present value of $1.14 billion, based on a 5% discount rate. It used $26-per-oz.-silver and $1,975-per-oz.-gold to achieve an 86% internal rate of return, a nine‑month payback and a capex ratio of 5.1 to 1.

Closing of the financing package is expected in the first quarter of next year, Vizsla said. The facility is expected to carry an interest rate of 10% during construction, which will decline after the start of production.

Early drawdown

Provided certain conditions are met, Vizsla may make an early drawdown of $25 million that would provide immediate funding for early development and construction preparation. Remaining funds are to be tied to the feasibility study, equity funding and permitting, and become available when a construction decision has been made.

Vizsla says it received significant interest from several banks and alternative lenders in North America and Europe. Each offered “highly competitive” terms, according to the company.

“Macquarie brings deep expertise in structuring project financing for large-scale mining developments, reinforcing Panuco as a globally recognized, financeable asset,” Vizsla CEO Michael Konnert said in the statement. “Securing this debt financing mandate brings us one step closer to de-risking Panuco into production.”

Vizsla shares rose 0.2% to C$5.18 in Monday afternoon trading in Toronto, giving the company a market value of about C$1.8 billion. The stock has traded between C$2.33 and C$5.34 in the past year.