Kingsrose secures A$15m funding to expedite Talang Santo development
PERTH (miningweekly.com) – Indonesian gold miner Kingsrose Mining has secured a A$15-million funding facility from Credit Suisse to expedite mine development of its Talang Santo project, once the Indonesian Mines Department provided final permission for full mining activities to restart.
Operations at the Talang Santo project were halted in September last year following a fatality, with the Indonesian authorities undertaking an investigation into the accident.
The project was expected to restart next month.
The Talang Santo mine is the second production operation at the Way Linggo project and has a resource of some 287 489 oz of gold and 894 951 oz of silver.
Kingsrose said on Tuesday that some of the funds would go towards drilling to further define and expand the Talang Santo resource, test nearby targets and for general working purposes.
“This funding will allow us to ramp up production at Talang Santo as quickly as possible and ensure that the project generates maximum income for both Kingsrose shareholders and for Indonesia, particularly for the people of Lampung province,” said Kingsrose MD Chris Start.
The funding would be provided through a two-part prepaid gold transaction to PT Natarang Mining (PTNM), which is 85% held by Kingsrose and operator of the Way Linggo project, which includes the Talang Santo operation.
The prepaid transaction would essentially involve PTNM delivering specified quantities of gold ounces on a monthly basis, starting in January 2014, and ending in July 2015. The sales proceeds would take place over two tranches, with the first $4-million tranche executed on the completion of the transaction documentation, before the end of this month.
The second $11-million payment would be executed upon the Indonesian government giving permission for full mining to resume at Talang Santo, including receipt of a forestry “borrow and use” permit, and a review by Credit Suisse of an updated cash forecast.
The combined quantity of gold effectively priced and committed for delivery under the funding agreement represented less than 20% of expected production at Way Linggo during the delivery months.
PTNM entered into a similar agreement with Credit Suisse in December 2010 using silver, which provided the company with A$13-million in funding. The funding was used primarily to retire loans inherited with the acquisition of PTNM.
One remaining delivery of 20 005 oz of silver was required before the end of February.
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