PERTH (miningweekly.com) – Gold hopeful Sumatra Copper & Gold has executed the documentation for its $45-million funding facility for its Tembang gold project, in Indonesia.
Earlier this month, Sumatra announced that it had secured the senior debt facility with Nomura Singapore and Indonesia Eximbank.
“The signing of the documentation for the Tembang finance facility is a major milestone for the company that will allow the construction and commissioning of the Temang gold mine,” said Sumatra MD Julian Ford on Wednesday.
“The project shows excellent exploration upside and the processing plant has been designed with expansion in mind.”
Ford noted that the execution of the facility with Indonesian and Asian financial backing only one day after newly elected President Joko Widodo was inaugurated, was a sign of the enthusiasm for Indonesia’s future.
The three-year facility would have an interest rate of 7.5%, increasing to 10% after 18 months, with a redemption premium at the end of the loan period. Up to 250.59-million warrants would be convertible into one Chess depository interest in the company, exercisable at a price of 5.7c each, with the three-year term on the warrant, from the drawdown date.
Hedging arrangements with Nomura would also allow Sumatra to hedge up to 65% of the gold and silver production from Tembang over the life of the facility.
An initial tranche of $40-million would be available for drawdown within 30 days of signing the documentation, with the second tranche of $5-million available at the practical completion of the process plant, provided that the completion took place within 12 months of the first drawdown.
Sumatra was required to raise $5-million in equity within six months of the drawdown, and should the company be unable to use the second tranche financing, a further $5-million equity raise was required.
Sumatra was expected to start construction at Tembang as soon as the first tranche payment was secured, which at this stage was scheduled for early November.
The recently updated definitive feasibility study on Tembang forecast a total production of 168 794 oz of gold and about 1.8-million ounces of silver, at a processing rate of 400 000 t/y. The project is expected to produce about 33 000 oz/y of gold and 345 000 oz/y of silver, at a cash operating cost of $470/oz.