The loan has a term of 6 years and an interest rate of between LIBOR +4.25% and +4.75%. The mandated banks, which included Societe Generale and Credit Suisse, have the blessing of their respective credit departments for the project facility, contingent on a few things:
- Roxgold must top up a overrun account with a $20 million equity financing.
- Hedge 65,000 ounces of gold production (roughly 8.5% of reserves and is payable over the 6-year term of the loan).
- Granting of the exploitation permit from the Burkina government.
“Yaramoko is a unique asset, and we are delighted to see its quality reflected in the attractive terms outlined in our debt financing package, including very competitive interest rates,” commented John Dorward, President and CEO. “We mandated the Banks three months ago and are very pleased to have secured the support of Credit Suisse and Societe Generale in such a short period of time. We look forward to working in partnership with these experienced institutions to advance Yaramoko towards development in the fourth quarter.”
Yesterday, the company announced they have awarded their underground mining contract to an African mining group who subsequently agreed to take part of their contract in Roxgold stock (up to $15 million).
Roxgold has a catalyst filled year-end, including:
- Granting of the exploitation permit (Q4/2014)
- Initiation of regional exploration program (Q4/2014)
- Close and initial drawdown of debt facility (Q4/2014)
- Start development work at Yaramoko (Q4/2014)
- First gold production (H2/2015)
Given the grade of Yaramoko – average of 11.6 g/t gold going into the mill – it is not that surprising that the company was able to close this despite the gold price falling $100 per ounce over the past 5 weeks.
According to the most recent feasibility study, the project is expected to cost a total of $106.5 million. At $1,300/oz gold this capital can be paid off in 1.6 years and generate a 48.8% after-tax internal rate of return.
The company has $25 million in cash from their last raise, a $29 million bought deal done at $0.58 per share which saw Appian Capital come in for $12.5 million.
With shares trading 35% higher than this last raise, investors shouldn’t get spooked by a small equity to raise to build this world-class mine.
Additionally, unlike True Gold who chose a streaming deal to fund the development of their mine, Roxgold remains a takeover candidate as it is unencumbered by any streams or royalties (outside of the government royalty).