Armadale appoints contract miner to help finance, develop DRC project
JOHANNESBURG (miningweekly.com) – Aim-listed miner Armadale has entered into a heads of terms agreement with contract miner Africa Mining Contracting Services (A-MCS) to fund, develop, build and operate the Mpokoto gold project, in the Democratic Republic of Congo (DRC).
Under the terms of the agreement, which was subject to the execution of a final, definitive agreement between the parties, A-MCS would introduce investors to provide up to $20-million in debt financing to fund the development of the 678 000 oz project, in the Katanga province, to production in 2016.
“The provision of [the] project finance is a crucial step in the project’s development and, with extensive local experience, we are delighted to have signed with A-MCS. We will now work closely with our new partners to finalise the definitive feasibility study (DFS) and the definitive agreements to deliver a low-cost, low-capital expenditure mine capable of generating excellent returns for shareholders.
“With this funding and development agreement, an initial net present value of $55.3-million – based on a forecast gold price of $1 250/oz – and a further potential resource upgrade, Mpokoto continues to show its commercial value,” Armadale director Justin Lewis commented.
The mine’s scoping study identified that $8.25-million would be required for developing the processing plant, $3.75-million for associated infrastructure and $8.5-million for infrastructure. The final agreed amount of funding would be subject to the agreed results of the DFS.
The financing would be provided through loan notes secured over the project at an interest rate of 12.5%, repayable anytime up to 36 months after the provision of the loan.
It was envisaged that the providers of such loan would be granted a warrant over 5% of the issued share capital in Kisenge – a subsidiary of Armadale.
A-MCS also agreed to work with Armadale and its principal consultant Bara Consulting to complete the DFS, ensuring that the group benefits from A-MCS’s in-country expertise and that the costs, both capital and operational, were agreed between all parties.
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