After sifting through a bundle of project funding proposals West African gold developer Tietto Minerals has consummated a deal with Taurus Mining Finance Fund to acquire up to US$140 million of debt funding necessary to build its 3.35-million-ounce Abujar gold project in Côte d’Ivoire. The company says the deal provides certainty to its shareholders and comes within six weeks of its Abujar definitive feasibility study or “DFS” hitting the streets.
Prior to hammering out a deal with Taurus, Tietto reviewed a barrage of project funding proposals from offshore financial institutions, traditional banks, other debt funders, streamers and fixed income providers that ranged between US$120m and US$180m.
There were no shortage of potential suiters looking to get a piece of Tietto’s Abujar gold project following the tabling of its pulse-quickening DFS completed in October this year. Results from the study pointed to a massive A$2 billion EBITDA over the initial 11-year life of the mine, an extraordinary pre-tax net present value of A$1.3 billion and a projected pay back period of under a year for the US$200m in capital required to build the project. Remarkably, results from the DFS also had an off-the-scale internal rate of return of 115 per cent.
According to Tietto, Taurus is mandated to provide between US$130m to US$140m to be used to bankroll its Abujar gold project development and with more than 50 per cent of the project funding secured in debt, Tietto will keep its share capital dilution to a minimum. Taurus is currently chipping away at its due diligence over the project and will provide a committed offer for financing in due course.
Under the terms of the agreement, the duo have agreed on a 5-year loan facility with repayments commencing mid-2023. Notably, the deal includes no mandatory gold hedging and offers an early repayment option without a penalty.
We are extremely pleased to be working with Taurus who can deliver the funds needed on our timeline. Our experienced project build team has been advancing early works and now have confidence the debt funding will be in place as they proceed with the major works needed to develop the Abujar Gold Project into West Africa’s next gold mine.
Tietto has been plugging away at its flagship Abujar deposit and began planning for construction of the Abujar Gold Project after hitting a coveted 3 million ounce resource. The company plans to continue its frenzied exploration of its West African landholdings using its own low-cost fleet of diamond drill rigs.
Outside of the boardroom, the company recently served up another lovely set of numbers from its fifth round of drilling at the Abujar-Gludehi deposit. The best result from the latest round of diamond drilling was an 8 metre hit going 12.43 grams per tonne gold from 187m including a 2m intersection grading an impressive 48.37 grams per tonne gold.
The size of the debt funding for Abujar represents a major shot in the arm for Tietto who otherwise would have needed to issue a truck load more shares to fund the project – a luxury it looks like it can afford with a predicted average annual EBITDA of approximately US$138m or AUD$187m.
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