PERTH (miningweekly.com) – Gold developer Besra Gold has inked a $300-million gold pre-purchase and offtake funding deal with shareholder Quantum Metal Recovery.
Besra told shareholders on Tuesday that the $300-million in funding, which would be paid over 30-months against future production ounces, would enable the company to fully fund production at its Bau gold project, in Malaysia, as well as to fund the appraisal of other deposits within the Bau goldfield corridor.
The facility is expected to remove the need for dilutive equity financing or project debt and covers up to three-million ounces of gold offtake. Subject to drawdowns under the facility occurring, the funding will be available at a rate of up to $10-million a month with an initial $2-million immediately available on the execution of a term sheet, and a further $3-million on the execution of the facility agreement.
Deliveries to Quantum are to be made from all gold produced up to 25 000 oz, 80% of all gold produced from 25 001 oz to 120 000 oz and thereafter 65% of all gold produced, leaving 35% of gold production unassigned.
“This funding would completely alter Besra’s trajectory and provides a clear pathway to gold production at the Bau project. At a time when access to capital for emerging gold producers is difficult and typically highly dilutive, the board is very pleased to have removed this impediment to Besra’s growth,” said Besra chairperson Jocelyn Bennett.
“We now have a clear line of sight on commencing production at Bau, with our issued capital intact, as well as recourse to little, if any, debt and the restrictive covenants typically required by lenders. At completion, Besra will have immediate access to funding to advance the Bau project. We plan to commence an update of the 2013 feasibility study and accelerate our plans to begin pilot production in calendar year 2023.
“On the exploration front, we will focus on upgrading the quality of our Joint Ore Reserves Committee complaint resource by converting a portion of our Inferred ounces into the Measured & Indicated category. With Quantum’s position as a major shareholder, we have a strong alignment between the Ccmpany’s funding partner and the interests of shareholders. The facility clearly endorses the long-term viability of Besra's future in Sarawak, where Quantum already has a firm presence. Quantum continues to demonstrate a clear commitment to support our exploration and development strategies in Sarawak and at Bau.”
The transaction is subject to a number of conditions, including shareholder and regulatory approvals.