Reed Resources secure Barclay's funding
Australian gold producer reed Resources has secured a debt financing facility of up to $23 million for the working capital requirements of the Meekatharra Gold Project Joint Venture in Western Australia.
Reed has announced its current $40 million underwritten rights issue will fund the construction and commission costs, while the debt facility will finance the projects requirements, including further exploration and business development.
The key features of the facility are summarised as follows:
- Facility: A $20 million Revolving Credit Facility which allows Reed Resources to redraw principal amounts subject to certain conditions precedent and a $3m Performance Bond facility;
- Tenor: Approximately Two years.
- Hedging: A hedging facility which includes an Early Hedge Facility giving Reed the flexibility to buy put options prior to the Revolving Credit Facility being activated. The facility includes bought puts for first six months of production, then nominally 50,000 to 60,000 ounces in forward delivery contracts and the balance bought puts.
Managing Director Chris Reed said: “This is a great result for the Company. Support from Barclays, a leading global mining project finance provider, is a major vote of confidence in the Meekatharra Gold Project and its future production profile.
“We are currently refurbishing the existing plant and we remain on-track for gold production in the December quarter of this year. Whilst hedging is required under the facility, it represents less than 8% of our current Probable Reserves, and it enables us to remove 100% of the downside risk in the gold price. The facility is able to be increased and extended by the inclusion of agreed reserves to the current Stage 1 mine plan,” Mr Reed concluded.