THE BOURSE WHISPERER: Kin Mining (ASX: KIN) announced the execution of a binding term sheet for $35 million (US$27M) with Canadia-based Sprott Private Resource Lending.
Kin Mining said the debt package will support the full pre-production and construction cost of the company’s 100 per cent-owned Leonora gold project (LGP) located in the North-Eastern goldfields region of Western Australia, forecast to be in production during the second half 2018.
Key terms include:
First payback is expected 18 months after first drawdown (expected 28 June 2019);
Annual interest rate of 8 per cent, plus the greater of US 12-month LIBOR or 1 per cent;
No cash flow sweep;
No cost overrun facility;
3,500,000 KIN ordinary shares will be issued to Sprott on closing with the shares to be escrowed for four months;
1.5 per cent NSR on first 100,000 ounces of gold produced by the LGP; and
Three-year loan term.
Kin explained the Credit Facility provides sufficient funding to carry out the necessary pre-production capital works, including the relocation and upgrade of the Lawlers mill to commence production at the LGP.
A Definitive Feasibility Study estimated a pre-production capital cost of $30 million with an 18 per cent contingency of $5.4 million for a total of $35.4 million.
Sprott has concluded technical due diligence and received investment committee approval, however the Credit Facility remains conditional on completion of legal and formal documentation and is expected to be closed by 23 December 2017.
A minimum equity raise will be required as a condition.
As a leading investor in the natural resource sector, Sprott said it was excited to partner with Kin to develop the LGP.
“We are delighted to partner with Sprott, the Credit Facility will allow us to immediately commence the development of the LGP and set us on a clear pathway to gold production and cash flow,” Kin mining managing director Don Harper said in the company’s announcement to the Australian Securities Exchange.
“Sprott is known to be well-versed in determining the viability of resource projects and making astute investment decisions.
“We look forward to collaborating with Sprott to become Western Australia’s next gold producer.”