Project Finance & Equity Subscription Agreement

Nativo secures US$3.5M in conditional funding to complete its Peru gold plant by Q2 2027.

What the company is saying

Nativo Resources Plc is announcing a conditional, binding agreement with Chancery Royalty Limited for US$3,500,000 in project finance and a £600,000 equity subscription to finish construction and commission Phase 1 of the La Patona Gold Ore Processing Plant in Peru. The company frames this as a 'fully funded pathway' to first production, emphasizing that several million dollars have already been invested and that the new funding will be exclusively used for construction, commissioning, and working capital. Nativo highlights that the equity subscription is split into two tranches of £300,000 each at 0.21 pence per share, with Chancery and its introduced investors collectively holding up to 17.4% of the enlarged share capital after both tranches. The announcement details the grant of a 6% gross revenue share on gold produced until Chancery receives the equivalent of 3,034 troy ounces, after which a 1.5% GRS applies for the life of the operation. CEO Stephen Birrell positions this as a milestone for Nativo’s strategy to build a vertically integrated gold business, while Chancery CEO Jeremy Gray underscores alignment and forecasts Chancery’s gold equivalent ounces to rise from 4,000 in 2027 to over 28,000 by 2030. The tone is confident and forward-looking, with repeated assertions of the project's advanced stage and the efficiency of the funding structure.

What the data suggests

The agreement provides for US$3,500,000 in project finance, to be drawn in seven monthly instalments of US$500,000, with the first instalment due by 31 December 2026, subject to definitive documentation. The funds are restricted to construction, commissioning, infrastructure, and working capital for La Patona Phase 1, and cannot be used to repay existing debt. The equity subscription totals £600,000, split into two tranches of 142,857,143 shares each at 0.21 pence per share, raising £300,000 per tranche, with both tranches together representing 17.4% of enlarged share capital and Chancery holding 8.7%. Chancery receives 142,857,143 warrants at 0.32 pence per share (a 52% premium) for three years. In exchange for the project finance, Chancery is granted a 6% gross revenue share on gold produced until it receives the equivalent of 3,034 troy ounces, then 1.5% for the remaining life of La Patona. The La Patona plant is a 70 TPD leaching/cyanidation facility, with several million dollars already spent and construction expected to take five to six months once resumed, targeting commissioning in Q2 2027. The company expects subsequent expansions to 350 TPD to be funded from Phase 1 cash flow. Nativo also repriced 443,105,263 warrants for YA II PN Ltd from £0.004739 to £0.0032 as part of the agreement. All figures are forward-looking and contingent on execution of definitive documents.

Analysis

The announcement is upbeat, highlighting a conditional binding letter of intent for US$3.5 million in project finance and a £600,000 equity subscription to complete the La Patona plant. However, the agreement is not yet definitive, and all funding is subject to final documentation. Most key claims are forward-looking: construction is not yet underway, the first finance instalment is due by December 2026, and commissioning is targeted for Q2 2027—nearly two years away. The benefits (gold production, revenue share, expansion funding from cash flow) are all contingent on successful completion and operation of Phase 1, with no immediate earnings impact. The capital outlay is significant, and while the plant is described as 'substantially developed,' there is no disclosure of current cash, profit, or operational performance. The language around a 'fully funded pathway' and 'milestone' is somewhat inflated given the conditional status and long execution timeline.

Risk flags

• ●The agreement is conditional and requires execution of definitive documentation before any funding is drawn, introducing legal and timing risk. If the parties fail to agree on final terms, the project could be delayed or the funding may not materialise.
• ●The project finance is to be drawn in seven monthly instalments starting no later than 31 December 2026, meaning there is a significant wait before construction resumes, and any slippage in the timeline could push commissioning beyond Q2 2027.
• ●The gross revenue share structure (6% until 3,034 troy ounces, then 1.5% for life) commits a portion of future revenues to Chancery, which could impact Nativo’s long-term cash flow and profitability, especially if gold prices or plant performance underperform expectations.
• ●The equity subscription and warrant issuance will dilute existing shareholders, with up to 17.4% of enlarged share capital issued to Chancery and its introduced investors, and 142,857,143 warrants at a 52% premium further increasing potential dilution.
• ●The company assumes that Phase 1a and Phase 2 expansions will be funded from Phase 1 free cash flow, but this is unproven and depends on successful, timely ramp-up and positive gold market conditions. Any operational or market setback could require further external funding.

Bottom line

Nativo’s conditional agreement with Chancery Royalty provides a potential US$3.5 million in project finance and £600,000 in equity to complete its La Patona gold plant in Peru, but all funding is subject to final documentation and will not begin until at least December 2026. The deal structure gives Chancery a significant equity stake, a gross revenue share on gold production, and warrants, resulting in both immediate and future dilution for current shareholders. The timeline to first production is long, with commissioning not expected until Q2 2027, and all operational and financial benefits are contingent on successful execution of construction and ramp-up. The announcement is detailed on transaction terms but does not provide realised financials or operational metrics, so the credibility of the 'fully funded pathway' narrative depends on execution. Investors should watch for the signing of definitive agreements and evidence of construction progress as the next key catalysts. The most important takeaway is that this is a high-capital, long-lead project with material execution and dilution risks, and no near-term cash flow.

Announcement summary

(LON:NTVO) Nativo Resources Plc announced it has signed a conditional binding letter of intent with Chancery Royalty Limited for project finance and an equity subscription to complete the construction and commissioning of the Phase 1 La Patona Gold Ore Processing Plant in Peru. The project finance totals US$3,500,000, to be drawn in seven monthly instalments of US$500,000 each, with the first instalment due by 31 December 2026, subject to definitive documentation. The project finance is to be used exclusively for construction, commissioning, associated infrastructure, and defined working capital requirements at La Patona Phase 1, and cannot be used to service or repay existing indebtedness. In consideration for the project finance, Nativo will grant Chancery a 6% gross revenue share (GRS) on gold produced at La Patona until receipts equivalent to 3,034 troy ounces of gold are received (Stage 1 GRS), after which a 1.5% GRS will apply for the remaining life of the operation (Stage 2 GRS). The equity subscription totals £600,000 in two tranches: Tranche A is for 142,857,143 new Ordinary Shares at 0.21 pence per share, raising £300,000, with settlement deferred to 60 days from the agreement date; Tranche B is for 142,857,143 new Ordinary Shares at 0.21 pence per share, raising £300,000, to complete by the end of September 2026. Following Tranche A, Chancery is expected to hold approximately 9.5% of Nativo’s enlarged issued share capital; after both tranches, the combined 285,714,286 new shares will represent about 17.4% of the enlarged capital, with Chancery holding 8.7%. On Tranche A completion, Nativo will issue Chancery 142,857,143 warrants, exercisable at 0.32 pence per share (a 52% premium to the subscription price) for three years from the Tranche A completion date. The La Patona plant is a 70 TPD leaching/cyanidation gold processing plant, substantially developed, with several million dollars of capital already invested. Construction and commissioning are expected to take five to six months after recommencement, with commissioning targeted for Q2 2027. The Board expects that subsequent Phase 1a and Phase 2 expansions, increasing capacity to 350 TPD, will be funded from free cashflow generated by Phase 1 operations. Chancery will have a right of first refusal to finance all future expansion phases of La Patona and any other Nativo processing plant, producing mine, tailings project, or acquisition opportunity, for as long as the Stage 2 GRS remains in force. The agreement is conditional and legally binding, with definitive documentation to be negotiated and executed. Nativo has also agreed to reprice YA II PN Ltd’s 443,105,263 warrants from £0.004739 to £0.0032 as part of this agreement and in return for a waiver by YA of certain rights under its loan agreement. Stephen Birrell, Chief Executive Officer of Nativo, stated that the agreement provides a clear and fully funded pathway to complete La Patona Phase 1 and is a milestone for establishing gold ore processing capability in Peru. Jeremy Gray, Chief Executive Officer of Chancery, commented on the partnership and Chancery’s forecast to grow its Gold Equivalent Ounces from 4,000 in 2027 to over 28,000 ounces by 2030.

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