Calidus secures £60.9m debt financing for Warrawoona project
Calidus Resources (Calidus) has executed a committed credit approved letter of offer from Macquarie Bank for project loan facilities totalling £60.9 million, along with an associated gold hedging facility (debt financing) to fund the development of its 100 percent owned Warrawoona Gold Project in Western Australia.
The selection of Macquarie Bank as preferred debt provider delivers a debt financing package with low overall cost, reasonable covenants, ability to distribute and use free cash, low shareholder dilution and flexibility in relation to early repayment, according to a Calidus statement.
The debt financing package follows an extensive global tender and due diligence process on Calidus and the Warrawoona Project. The company adds that it is on track for the commencement of plant construction in Q1 2021.
“Binding terms for the debt financing were agreed following a strongly contested and rigorous global tender process culminating in final discussions with shortlisted potential financiers who presented very competitive terms. These parties undertook an extensive technical due diligence process which provides strong validation of the technical aspects of the Warrawoona Project,” the statement says.
“This is a significant milestone for the project and the Company and allows the Company to commit to full development in the coming quarter. Macquarie have conducted extensive due diligence on Warrawoona and their agreement to provide the facility is a strong vote of confidence in the Project and Calidus, and we look forward to working with the team at Macquarie on completing all documentation and conditions precedent to drawdown.
“With the access road, water bores and telecommunications now complete and the village install progressing on time and budget, we will now conclude all major contracts and final operating permits to allow for main project construction in the coming quarter,” says Dave Reeves, managing director at Calidus.
Although the full terms of the facilities are confidential, the key points are:
- Project loan facilities (“Facility”) of £60.9 million and competitive margin above BBSY (pre-completion and post-completion)
- Loan covenants customary for a facility of this type and reflect the competitive nature of the current bank market and 3.25-year tenor from commencement of repayments in June 2022
- The Facility can be repaid early at any time without restriction or financial penalty and ability to distribute surplus operating cashflows (after debt service) from the project subject to certain conditions - providing ongoing funding which can be used at Calidus’ discretion
- Mandatory hedging of approximately 105,000oz with deliveries spread over the tenor of the facility – this hedging quantum is approx. 25% of forecast production over this period
- Security is provided via a fixed and floating charge over the assets of Keras (Pilbara) Gold Pty Ltd (a wholly owned subsidiary) and corporate guarantee provided by Calidus until the achievement of Project Completion secured by the shares held in Keras (Pilbara) Gold Pty Ltd
- The Facility is drawn down in stages with interest payable on the amounts drawn and a competitive undrawn line fee payable on undrawn funds in the availability period
Completion of final Debt Financing agreements remains conditional upon documentation and other conditions precedent usual for financings of this nature. Subject to satisfaction of these remaining conditions, Calidus expects final agreements to be concluded early 2021, the statement adds.
Argonaut is Calidus’ financial advisor in relation to the debt financing.
Newmont acquires Canada’s GT Gold in $325mn deal
Newmont, the world’s biggest gold miner, has acquired Canada’s GT Gold in a deal worth $325mn. The gold giant now controls the Tatogga gold-copper project in the Traditional Territory of the Tahltan Nation.
“With the acquisition of GT Gold and the Tatogga project in the highly sought-after Golden Triangle district of British Columbia, Canada, Newmont continues to strengthen our world-class portfolio,” commented Newmont President and CEO Tom Palmer.
“We look forward to continuing to build a respectful and meaningful relationship with the Tahltan Nation, including the community of Iskut. The relationships we have with Indigenous communities, First Nations and host communities are critical to the way we operate. We will partner with the Tahltan Nation at all levels, and with the Government of British Columbia to ensure a shared path forward as the Company understands and acknowledges that Tahltan consent is necessary for advancing the Tatogga project.”
Newmont’s acquisition includes the Tatogga project, comprised primarily of the Saddle North deposit, which has the potential to contribute future significant gold and copper annual production. There are also further exploration opportunities beyond the known deposits at Saddle North within the land package. The Tatogga project adds to Newmont’s existing interest in the prospective Golden Triangle through the company’s 50% ownership in the Galore Creek project.
Newmont is the world’s leading gold company and a producer of copper, silver, zinc and lead. A world-class portfolio of assets, prospects and talent is anchored in favourable mining jurisdictions in North America, South America, Australia and Africa. The American miner is celebrating its 100th anniversary this month.
With gold prices on the rise, the last six months has seen gold industry M&A activity accelerating. A recent Mckinsey report, advises that the industry need to be mindful of mistakes made during the previous gold price boom, when growth was chased unidirectionally by several companies.