Cavalier Resources (ASX: CVR) has signed a non-binding term sheet with US-based Raptor Capital International for a $17.5 million stream facility to fully finance the development of a Stage 1 open pit at its Crawford gold project in Western Australia.

The deal involves the delivery of up to 11,000 ounces of gold from the near-term project on the basis of one ounce for every 3.25oz produced, with the delivery schedule yet to be finalised.

Any ounces remaining at the conclusion of Stage 1 could be delivered early at Cavalier’s discretion from its allocation or carried forward for delivery from potential future open-pit stages.

Capital drawdown

The new funding facility is in addition to the $13.2m peak capital drawdown requirement the company outlined in the March 2024 Crawford pre-feasibility study.

It will provide a significant working capital contingency balance for Cavalier as well as fund near-mine extensional infill drilling to upgrade further portions of the project’s resource to ore reserves and potential future pit development.

Raptor has completed an initial technical review of the Crawford project, which will help streamline the mandatory 60-day due diligence process.

Significant milestone

Cavalier chief executive officer Daniel Tuffin said the signing of a term sheet with an international gold streaming fund marked a significant milestone for the company.

“This term sheet reinforces the development strategy of the Stage 1 oxide pit, the broader Crawford project area and the planned onsite processing pathway,” he said.

“Should funding be secured, it would greatly reduce the need for shareholder dilution through equity capital raisings.”

Alternative financing

A stream facility is a structured alternative financing product whereby the provider agrees to advance a facility amount in exchange for a percentage of future gold production up to an agreed total amount of ounces.

The Crawford facility is non-dilutive to shareholders and does not require additional equity capital to be raised to advance Stage 1 into production.

Mr Tuffin said this would ensure that any potential returns and earnings on a per-share basis are maximised.

Stage 1 mining

Cavalier moved Crawford closer to production this month after submitting all compliance reports, works approvals and applications required for the commencement of Stage 1 mining.

The company has already approved the project management plan and is in the final stages of assessing native vegetation clearing permit and water applications.

“The submission of all mining approval works marks the culmination of a large workload of compliance requirements,” Mr Tuffin said.

“Considering the current gold spot price is well in excess of the $2,900/oz price applied to the pre-feasibility study, we believe Stage 1 could generate substantial additional free cash flows in excess of our present market capitalisation.”