West African Resources (ASX:WAF) reports it is now ‘fully funded’ to bring its Kiaka Gold Project in Burkina Faso into production with a US$265 million loan facility.
The company has mandated financiers Sprott Resource Lending and Coris Bank International to provide the syndicated corporate loan facility. The syndicate completed thorough technical and environmental due diligence on both the Sanbrado Gold Operation and the Kiaka Gold Project and has provided a credit-approved committed offer of finance.
The loan facility will be provided under a two-tranche structure, with $165 million under tranche one and the equivalent of US$100 million denominated in CFA Francs (XOF) under tranche two.
Repayments will begin 2 years after satisfying the conditions of the initial drawdown, while the final repayment will be made 5 years after the closing date. Early repayments will be permitted from 3 years after the closing date.
Other terms under the facility include an average interest rate margin on the 2 tranches of 5.3% per annum over the reference rate and a fixed production payment agreement (PPA) of US$12.44 per ounce on the first 1.5 million ounces of gold produced from Kiaka.
West African Resources retains the right to buy back the PPA, and there is no mandatory gold hedging.
Conditions precedent to drawdown include executing and delivering documents related to the loan facility, along with lodging security documents and other conditions customary for a facility of this nature. The first drawdown under the loan facility is expected to occur in Q4 2023.
Commenting on the corporate loan facility, West African Resources Chairman and Chief Executive Officer (CEO) Richard Hyde says: “WAF has undertaken a comprehensive debt process that sees Kiaka fully funded to first gold.
“Kiaka is one of the best gold projects in development globally”
We are pleased to award the US$265 million debt mandate to experienced mining sector financiers, Sprott and Coris Bank, based on their committed and credit-approved offers.
Kiaka is one of the best gold projects in development globally. Construction is well underway, and we look forward to completing the build at Kiaka and pouring first gold in the second half of 2025.
WAF is on track to become a +400,000-ounce-per-annum gold producer with the development of Kiaka. Our unhedged 10-year production outlook estimates production of more than 200,000 ounces of gold per annum in 2023 and 2024 and more than 400,000 ounces of gold per annum from 2025 to 2032.”
Sprott Resources Lending is a Toronto-based alternative asset manager that specialises in providing exchange-listed products, alternative asset management, and private resource investment strategies.
Coris Bank International is a Burkina Faso-based bank that has more than $3.2 billion in assets and finances ‘major’ mining projects in Burkina Faso, Côte d’Ivoire, Mali, and Guinea.
West African Resources is an ASX-listed gold producer focused on its Sanbrado Gold Operation as well as the Kiaka and Toega Gold projects in Burkina Faso. The company acquired a 90% interest in Kiaka in November 2021, while the remaining 10% is held by the Government of Burkina Faso.
According to the company’s latest quarterly report published on 26 April 2023, West African Resources had $160,400 cash at hand at the end of the quarter.
Write to Harry Mulholland at Mining.com.au
Images: West African Resources Ltd
