PERTH (miningweekly.com) – Gold developer OreCorp has received indicative debt funding proposals for the development and construction of its Nyanzaga gold project, in Tanzania.

The ASX-listed company on Thursday said that discussions with major European, African and Tanzanian banks have delivered non-binding expressions of interest to provide debt finance of more than $400-million for the project, well in excess of the $300-million debt target set by OreCorp in consultation with its financing advisers Auramet International.

The company is continuing discussions with several other financial institutions, including global export credit agencies, as it moves to secure syndicated debt funding for Nyanzaga.

OreCorp on Thursday said that recent positive legislative changes in Tanzania have seen the royalty rate of 6% being reduced to 4% in certain circumstances. The company is now considering how it may take advantage of the reduced royalty rate to implement other arrangements that may complement, enhance or partially replace the debt financing. Initial discussions with credit funds, and royalty and streaming providers have indicated strong interest in the project.

“We are pleased with the strong interest we have received to date from banks with respect to financing the project. The expressions of interest received give us further confidence in our ability to deliver on a comprehensive financing package for the project which meets our objectives of prudently managing leverage and minimising dilution to the company’s existing shareholders,” said chairperson Matthew Yates.

“We intend to further advance discussions with banks and other capital providers to ensure we have maximum flexibility to secure financing for the project in the prevailing market conditions.”

A definitive feasibility study for Nyanzaga estimated that the combined openpit and underground mine would produce 295 000 oz/y of gold at peak, averaging 250 000 oz/y for the first eight years of the mine life, and 242 000 oz/y for the first ten years.

Life-of-mine average gold production is estimated at 234 000 oz/y over the nearly eleven-year mine life. The study estimated a capital cost of $474-million.