Archipelago appoints bankers to finance gold project development
Tuesday, January 5 2010 - 11:41 AM WIB
The 3 banks and the company have agreed the terms of an indicative term sheet which forms the basis of an exclusive financing mandate entered into by the company with the banks on 5th January 2010.
Each of the three banks will now complete a process of due diligence necessary to obtain credit committee approval targeted for early 2010.
The Indicative Term Sheet contemplates the provision of US$60m of Project Finance together with a US$10m cost over-run facility. While the commercial terms are confidential, they are considered commensurate with the competitive environment in which the selection process has taken place, the company said.
The requirement for any additional working capital by way of equity has yet to be determined. Hedging of about 170,000 ounces (representing 15% of initial scheduled production) remains to be finalised, but is currently proposed to be by way of the purchase of put options leaving the company fully exposed to any increase in the gold price, it added.
Archipelago recently announced the issue of contractual letters of intent to McConnell Dowell regarding construction and management activities necessary to complete the processing plant and ancillary facilities. These awards are consistent with the Company's construction schedule and objective of production by 4th quarter 2010.
The Toka Tindung Gold Project has a resource of 1.75M ozs of gold equivalent, of which at least 1.1m ozs will initially be mineable by open pit. When in operation the project will produce at an average annualised production rate of 160,000 ounces of gold equivalent per annum for at least 6 years together with an additional 2 years processing lower grade stockpiles. The company's pits are currently designed at a very conservative US$600/oz gold price. (alex)