West African fi­nanc­ing will put San­brado in pro­duc­tion

Stockwatch Daily - - FRONT PAGE - Mr. Richard Hyde re­ports

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.

Eq­uity fi­nanc­ing

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;

• Ex­plo­ration;

• 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

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