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The loan will be used to refinance local debt in Argentina and update the mineral resource estimate for the Calcatreu project in Argentina, where it will also start a feasibility study. It will also be used for general working capital purposes.
CEO Christopher van Tienhoven said the loan was crucial to move Patagonia forward.
"Despite the closures of Cap Oeste and Lomada, the company retains an important asset base, comprising the over 1 million ounce standalone Calcatreu project in Rio Negro, the Cap Oeste underground resource and prospective exploration ground in Santa Cruz, Rio Negro and Chubut," he said.
"The loan facility will allow the company to commence work on the Calcatreu feasibility study and advance this project to the next level."
The loan, which can be drawn down in tranches of at least $100,000 each, matures on March 31, 2021, with interest payable on any amounts drawn down, accruing at a rate of 5% per annum.
All drawn down principle and accrued interest will be payable at maturity, although Patagonia can decide to prepay all or someof the drawn down and/or interest accrued before maturity without any early repayment penalties.
Miguens has a 53.19% shareholding in Patagonia, meaning that under AIM rules, Cantomi is also considered a related party to Patagonia.
To this end, the independent directors, excluding Miguens, consulted with nominated adviser Strand Hanson, which said the terms of the loan facility were "fair and reasonable insofar as the company's shareholders are concerned".
Patagonia has had a tough start to the year with the closure of two of its mines, with its shares down 44% since the year began to the current 43.9p (US58.11p).
