12th March 2018
Data source: S&P Global Market Intelligence
Teranga Gold Corp. said March 12 that it received a commitment letter from Taurus Funds Management Pty. Ltd. for a secured development finance facility of up to US$200 million, which includes a US$10 million equipment lease facility still under evaluation.
The funding also includes US$165 million to develop Teranga’s preproduction-stage Wahgnion gold property in Burkina Faso and to repay the US$15 million drawn on the company’s revolving credit facility as well as US$25 million for a feasibility study on its Golden Hill gold project in the same country.
The Wahgnion tranche will bear an interest rate of 8.75% per annum, payable quarterly in arrears. Principal repayments will start in the quarter ending March 31, 2020, followed by 10 quarterly payments starting July 31, 2020, and a bullet repayment Dec. 31, 2022. Early repayment is allowed at any time without penalty.
As part of the agreement, Teranga will enter into an off-take agreement for 1.1 million ounces of gold from Wahgnion, for which it will receive the prevailing spot price, subject to an agreed quotation period.
Upon execution of the US$165 million facility deal and subject to approvals, Taurus will be granted 2 million four-year warrants, with the strike price to be determined by Teranga’s volume-weighted average share price.
The US$25 million Golden Hill tranche will also have an interest rate of 8.75% per annum, payable quarterly in arrears, with a bullet repayment Dec. 31, 2022. Early repayment is also allowed without penalty.
Teranga said the drawdown on either tranche remains subject to various conditions, and while Taurus completed due diligence for the entire facility in February, the terms of the definitive documentation are still subject to negotiation. The facility is expected to close in the second quarter.
“Together with our cash on hand and free cash flows from our flagship Sabodala mine, we expect to have sufficient financial resources to bring Wahgnion, our second gold mine, into production and continue to advance Golden Hill through feasibility,” Teranga President and CEO Richard Young said.
Mill construction is scheduled to start at Wahgnion in the second quarter, and the first gold pour is anticipated by the end of 2019. The company expects Wahgnion to increase its annual gold output 50% to between 300,000 and 350,000 ounces.
