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.
Vale invests $150mn to extend life of Manitoba operations
Vale has announced a $150mn CAD investment to extend current mining activities in Thompson, Manitoba by 10 years while aggressive exploration drilling of known orebodies holds the promise of mining well past 2040.
Global energy transition is boosting the market for nickel
The Thompson Mine Expansion is a two-phase project. The announcement represents Phase 1 and includes critical infrastructure such as new ventilation raises and fans, increased backfill capacity and additional power distribution. The changes are forecast to improve current production by 30%.
“This is the largest single investment we have made in our Thompson operations in the past two decades,” said Mark Travers, Executive Vice-President for Base Metals with Vale. “It is significant news for our employees, for the Thompson community and for the Province of Manitoba.
“The global movement to electric vehicles, renewable energies and carbon reduction has shone a welcome spotlight on nickel – positioning the metal we mine as a key contributor to a greener future and boosting world demand. We are proud that Thompson can be part of that future and part of the low carbon solution.”
Vale continues drilling program at Manitoba
Coupled with today’s announcement, Vale is continuing an extensive drilling program to further define known orebodies and search for new mineralization.
“This $150mn investment is just one part of our ambitious Thompson turnaround story. It is an indicator of our confidence in a long future for the Thompson operations,” added Dino Otranto, Chief Operating Officer for Vale’s North Atlantic Base Metals operations.
“Active collaboration between our design team, technical services, USW Local 6166, and our entire Thompson workforce has delivered a safe, efficient and fit-for-purpose plan that will enable us to extract the Thompson nickel resources for many years to come.”
The Thompson orebody was first discovered in 1956 by Vale (then known as Inco) following the adoption of new exploration technology and the largest exploration program to-date in the company’s history. Mining of the Thompson orebody began in 1961.
“We see the lighting of a path forward to a sustainable and prosperous future for Vale Base Metals in Manitoba,” said Gary Annett, General Manager of Vale’s Manitoba Operations.