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Harte Gold brings banker on board for strategic review of White River mine

Gold producer sets the bar high in seeking financing to expand mine, boost production, build more ounces
Harte Gold Sugar Zone concentrator
(Harte Gold photo)

Scotiabank is assisting Harte Gold in a strategic review of its Sugar Zone Mine near White River.

The banker is working with the Toronto gold miner, which needs a cash injection to further develop the three-year-old mine, boost production, and meet its debt obligations to its lenders.

A month ago, the company launched the review after falling short in some key performance areas and failing to reach some ambitious targets at the underground mine over the last year.

Management said all options are on the table during this process, which could involve debt restructuring, an equity investment with a strategic partner, a business combination with another mining company, or even a sale.

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In a June 9 news release, Harte said a number of interested parties have come forward to sign confidentiality agreements and they've been given access to Harte's data room to do their due diligence. A U.S.-based debt advisor is also on board to evaluate potential debt financing solutions.

To keep the mine sustainable and stay abreast of its debt payments, the company wants to accelerate underground development from a rate of 14 metres a day to 18 metres, and put more tonnes through its mill in order to maintain the pace of being an 800-tonne-per-day operation.

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Management had hoped to reach that benchmark sooner but has decided to delay that run rate until later this year. Eventually, the Sugar Zone production will be boosted to 1,200 tonnes per day. On the development front, the focus is on building a decline ramp to go deeper into the ore body.

Harte was forced to cut back on its gold production targets for 2021, dropping the guidance from 60,000 to 65,000 ounces per year to 50,000 to 55,000 ounces. With that comes a $22-million shortfall on the balance sheet by year's end that must be addressed.

Among the challenges Harte has had to deal with is a shortage of workers.

The mine is understaffed by 20 per cent and it's a tough labour market out there to find and secure underground miners and maintenance people.

For the remainder of this year, they'll deploy temporary contract workers while they double down on their recruiting efforts.

Harte is also experiencing supply chain issues in sourcing underground equipment and is looking to buy, lease or rent equipment.

The company is looking to raise exploration money to drill in and around Sugar Zone. The plan is to boost its infill program by 10,000 metres to 40,000 metres.

Management insists there's plenty of gold in the ground with consistent veins, but they're finding ore in unexpected places and want to tighten up on the drill spacing so as not to overlook any promising areas. The intent is to build more ounces in the reserve and gain a better understanding of the ore body in order to mine the Sugar Zone more efficiently.

The Sugar Zone Mine began production in 2019. Further exploration is underway on its 81,000 hectares, which sits in a significant greenstone belt known for the discovery of high-grade gold. Management maintains Sugar Zone has exceptional long-term value and remains buoyant on the exploration potential of the surrounding property.