Aurora Gold Project now fully funded

Canadian mining company, Guyana Goldfields Limited had secured a US$185 million loan to finance the construction of its large-scale mining project, the Aurora gold mine on the Cuyuni River and the project is now fully funded.

The lenders include the private sector arm of the World Bank: the International Finance Corporation (IFC) as well as Export Development Canada, ING Capital LLC, Caterpillar Financial Services Corporation, and the Bank of Nova Scotia. The loan which will fund the development and construction of the Aurora Gold Project, will be disbursed in two tranches.

Tranche 1 covers US$160 million and the second tranche entails a cost-overrun facility of US$25 million, the company said in a statement. Both tranches were still subject to negotiation and settling of definitive documentation, which will include customary project finance terms, fees, conditions, ongoing due diligence, and conditions precedent.

The maximum term of the facility is eight years and the interest rate is based upon the 3-month London Interbank Offered Rate, which based on current parameters would be 6.3% for the Tranche 1 facility and 6.8% for the Tranche 2 facility (if drawn), the statement said.

There will be no gold hedging requirements or other similar provisions associated with the facility, the company added.

The statement said that under the facility, the company is obligated to fund an additional US$33 million as a condition of first disbursement. The company intends to fund this through a private placement of 20-million common shares.

The company said that transaction and facility arrangement costs are estimated to be approximately US$11 million while overall, the company’s project budget including contingency is US$249 million. “The cost to complete the Project, including interest during construction, working capital, and transaction costs is expected to be US$277 million. Development costs of US$47 million have been incurred to date. Total funding sources amount to US$335 million and are composed of cash on hand, the proposed facility, and the additional US$33 million in funding; exceeding the cost to complete by US$58 million,” the statement said.

Guyana Goldfields Aurora project comprises an open pit and underground gold mine, process plant, tailings management area and other associated facilities. The Buckhall port facility will also be upgraded to accommodate ocean-going vessels and will provide facilities for cargo, fuel and personnel handling during project construction and operations.

The mine aims to produce 3.3 million ounces of gold over an initial 17- year mine life with gold production expected to average 194,000 ounces per year over the life of mine, and average 231,000 ounces per year over the first ten years.

Mining will be phased with initial open pit mining commencing in 2015 (continuing through 2023) with underground mining commencing in 2018 (continuing through 2031).

The IFC has said that the expected development impact from this project will include employment creation of about 700 to 900 jobs; fiscal payments in the form of royalties and taxes paid to government estimated at US$850 million over the 17-year mine life or US$50 million per year on average (based on US$1,300 per ounce gold); and setting good benchmarks in environmental and social sustainability for other potential projects in the region.

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