West African financing will put Sanbrado in production
West African Resources Ltd. has arranged a $200-million (U.S.) finance facility with Taurus Funds Management Pty. Ltd. It has also arranged a $43.17-million (Australian) private placement. It says it is financed through to gold production at Sanbrado.
WEST AFRICAN Resources Ltd. has provided an update on the following financing package for the development of its Sanbrado gold project in Burkina Faso (Sanbrado):
• Credit-approved $200million (U.S.) ($278-million (Australian)) finance facility with Taurus Funds Management Pty. Ltd.: Key terms of the debt facility include competitive interest rates, no hedging requirement, early repayment flexibility and an ability to distribute and use free cash; provides West African with a highly flexible financing package.
• The company is conducting a fully underwritten institutional placement to raise approximately $43.17-million (Australian). The placement comprises a single tranche with the issue of 172.7 million new ordinary West African shares and is underwritten at a price of 25 Australian cents per share.
• The company is also conducting a non-underwritten share purchase plan (SPP) to facilitate retail shareholder participation of up to $15,000 (Australian) per eligible shareholder at the offer price, subject to an overall cap of $5-million (Australian) (or 20.0 million shares). Highlights:
• West African Resources fully financed through to gold production at Sanbrado;
• Credit approved $200-million (U.S.) finance facility with Taurus Funds Management Pty. Ltd.;
• Underwritten placement for $43.17-million (Australian); • On track for first gold production at Sanbrado in September quarter of 2020.
Managing director Richard Hyde commented: “We have worked for the past five months to get the best debt terms for shareholders. The award of the $200-million (U.S.) debt mandate to Taurus follows a thorough competitive process involving technical due diligence, site visits and detailed negotiations.
“We have one of the best undeveloped gold projects globally, an experienced project build team and we now are now fully funded and looking forward to getting Sanbrado into production in the second half of 2020.” Debt financing
West African Resources has
mandated Taurus to provide a $200-million (U.S.) secured project finance facility to be used toward financing the development of Sanbrado. Taurus completed its technical and legal due diligence over the project and has provided a committed offer for finance. Key terms of the debt facility are:
• Fixed interest rate of 7.75 per cent per annum on drawn amounts, payable quarterly in arrears;
• Quarterly repayments commencing June 30, 2021, with final repayment Dec. 31, 2024;
• Early repayment allowed at any time without penalty; no mandatory gold hedging required;
• First drawdown of the debt facility expected to be available by the end of the first quarter 2019;
• Company to enter into an offtake agreement for 1.25 million ounces of Sanbrado gold production, pursuant to which the company will receive the prevailing spot price subject to an agreed quotation period; company retains a right to buy back the offtake at any time on agreed terms;
• Conditions precedent to drawdown include execution and delivery of the debt facility documents, lodging of security documents and other conditions customary for a facility of this nature.
The awarding of the debt mandate to Taurus follows a five-month competitive selection process conducted by the company’s independent financial adviser, Orimco Pty. Ltd. Fourteen proposals were received ranging from $124-million (U.S.) to $215-million (U.S.) from banks, debt funds and royalty companies.
Taurus is a privately owned mining finance fund that provides project development and acquisition finance to emerging mining and metals companies. Taurus has significant mining finance experience in West Africa and has recently provided debt facilities for two other significant new gold projects in the region.
Underwritten placement The placement to eligible sophisticated, professional and other institutional investors to raise approximately $43.17-million (Australian) will be conducted via a bookbuild today in Australia and selected international jurisdictions. The offer price is underwritten at 25 Australian cents per share.
The offer price represents a:
• 15.3-per-cent discount to the closing price of 29.5 Australian cents per share on Monday, Dec. 3, 2018, being the last trading day prior to announcement of the placement;
• 14.0-per-cent discount to the five-day VWAP (volume-weighted average price) of 29.06 Australian cents per share, up to Dec. 3, 2018;
• 14.3-per-cent discount to the 10-day VWAP of 29.18 Australian cents per share, up to Dec. 3, 2018.
The placement will be undertaken in a single tranche of 172.7 million new shares to raise approximately $43.17- million (Australian) under West African’s existing 25-per- cent placement capacity pursuant to Australian Securities Exchange listing rules 7.1 and 7.1A. The new shares will rank equally with existing West African shares.
As West African Resources has a secondary listing on the TSX Venture Exchange, the completion of the placement will be conditional upon the approval of the TSX-V, which the company anticipates to receive shortly.
Euroz Securities Ltd. and Sprott Capital Partners, a division of Sprott Private Wealth LP, together are the joint lead managers, underwriters and bookrunners to the placement. SPP
The SPP will be open to West African shareholders as at 5 p.m. Australian Eastern Daylight Time on the record date of Tuesday, Dec. 4, 2018, and whose registered address is in Australia or New Zealand. Eligible holders will be invited to invest up to a maximum of $15,000 (Australian) per shareholder in the SPP, subject to an overall cap of $5-million (Australian).
The issue price under the SPP will be the same as the offer price. No brokerage will be payable by subscribing shareholders. Further details on the SPP will be distributed to eligible holders shortly and released on the ASX.
Use of proceeds
The gross proceeds raised under the equity raising and the debt facility will be used to finance:
• Sanbrado development costs;
• Preproduction mining costs;
• Project financing costs including interest, charges and offer costs;
• Burkina Faso taxes associated with project construction;
• Corporate costs including working capital.
(See WAF Table 1 on page 29)
The timetable is indicative only and subject to change. The company reserves the right to amend any and all of these events, dates and times subject to the Corporations Act, the ASX listing rules and other applicable laws, including securities laws.
About West African Resources Ltd.
West African Resources recently announced the results of its updated feasibility study for the Sanbrado gold project in Burkina Faso. The study envisages an initial 11-year mine life, including 4.5 years of underground mining, and showed a 76-per-cent increase in probable reserves to 1.6 million ounces (20.4 million tonnes at 2.4 g/t gold). The project will have average annual production over the first five years of mine life of 211,000 ounces gold and a 16-month posttax payback on $185-million (U.S.) preproduction capital costs. Project economics are robust, with AISC (all-in sustaining costs) of $551 (U.S.) per ounce over the first five years and $640 (U.S.) over the life of mine.
We seek Safe Harbor.
(WAF) Shares: 690,824,727