Haile location Map

Haile Gold Mine location (Image: Romarco Minerals)

Romarco Minerals (R.T) received the mine operating permit from the South Carolina Department of Health and Environmental Control (SCDHEC). This is the final permit required for the 4.8 million ounce Haile gold project in South Carolina to commence construction. Romarco will need to deposit $30 million for a reclamation bond with an additional $30 million required over the life of the mine.

With all permits now behind them, Romarco's management team are now focused on financing the $385 million dollar mine. The climate for project financing remains challenged but Romarco has already managed to secure a $200 million debt facility with Caterpillar Financial Services Corp., Macquarie Bank Ltd. and Societe Generale Corporate & Investment Banking. The $200 million debt facility is in the final stages of due diligence and if completed would leave ~$185-200 million left to raise. Romarco is hoping to raise the rest through equity but does have other options.

The low initial CAPEX provides robust economics with a 32% IRR and 2.7 year payback period at $1200 gold.

*note these economics use a CAPEX of $275 million, not the $385 million figure discussed in today's news release, so these payback and IRR numbers are out-of-date.

The plan is to break ground in January 2015 with an 18 month construction period leading to first gold production in mid to late 2016.

Romarco's team have been with the company through all the permitting, environmental, mine planning, and feasibility studies. They will now have to mitigate potential start up issues and risks.

A strong shareholder base is behind the stock with 70% held by institutions.

Diane Garrett, president and chief executive officer, commented, "The mine operating permit is the final environmental permit required for the Haile project to commence mining operations, and we are extremely excited to have all necessary permits to break ground."

Romarco 1 yr chart

Romarco still needs to raise ~$200 million which they are hoping to do by issuing equity. The share price is most likely to remain fairly flat during the construction phase as happens with most mining projects. If gold moves substantially you will see share price movement though.

The project could be a takeover candidate as it is a sizeable asset (4.8 million ounces) with a good grade and low CAPEX. As of now Romarco plans on bringing Haile into production on its own.

Symbol: R.T
Share price: $0.61
Shares outstanding: 660.65 M
Market cap: $402.9 M

Read: Romarco's Haile Receives Mine Operating Permit

I have no position in any of the stocks mentioned. This is not investment advice. As always please do your own due diligence.