Nativo Resources (AIM:NTVO), the precious metals company with gold mining and processing interests in Peru, has signed a conditional binding letter of intent with Chancery Royalty to fund completion of the Phase 1 La Patona gold ore processing plant.
The package comprises US$3.5m of project finance, drawn in seven monthly instalments of $500,000 starting no later than 31 December, plus a £600,000 equity subscription split into two tranches of £300,000 each at 0.21p per share.
In exchange for the project finance, Nativo will grant Chancery a 6% gross revenue share on gold produced at La Patona until Chancery has received the equivalent of 3,034 troy ounces, falling to 1.5% for the remainder of the mine's life.
Tranche A completes 60 days after the agreement, giving Chancery roughly 9.5% of the enlarged share capital; combined with Tranche B, due by the end of September, Chancery-related holders will control approximately 17.4%.
Chancery also receives warrants over the combined subscription shares, exercisable at 0.32p, a 52% premium to the issue price, and a right of first refusal over future La Patona expansions and other Nativo projects.
The 70 tonnes-per-day Phase 1 plant, on which several million dollars has already been invested, is now expected to be commissioned in the second quarter of 2027, with subsequent expansion to 350 tonnes per day funded from Phase 1 cashflow.
"This agreement provides the funding to take it through to production", said chief executive Stephen Birrell, adding that the plant is central to building a vertically integrated processing business that reduces reliance on toll processing.
Nativo also agreed to reprice 443.11m warrants held by lender YA II PN from £0.004739 to £0.0032, in return for a waiver of certain loan rights.
News Intelligence what this means for the company
Nativo has secured $3.5m in project finance plus £600k equity from Chancery Royalty to complete Phase 1 of its La Patona gold plant, with drawdowns starting by end-December. The deal pushes first production to Q2 2027—six months later than the Q4 2026 target previously stated—but removes a critical funding gap that had threatened the project's viability; the equity raise at 0.21p per share dilutes existing holders by 17.4% when combined with Chancery's two tranches, offset by the certainty of capital to reach production.
The funding agreement validates La Patona's economics enough for a third party to back it with both debt and equity, but the six-month delay to Q2 2027 and the 6% gross revenue royalty (until 3,034 oz recovered) materially compress near-term cash generation and reduce the upside from Phase 1 ramp-up. Dilution to 17.4% for Chancery and warrant overhang from YA II PN's repriced 443m warrants create headwinds for existing shareholders even as construction risk recedes.
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