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Teranga Gold Corp (2)
Symbol TGZ
Shares Issued 107,343,902
Close 2018-03-12 C$ 4.01
Recent Sedar Documents

Teranga receives commitment letter for $165M financing

2018-03-12 07:39 ET - News Release

Mr. Richard Young reports

TERANGA GOLD RECEIVES COMMITMENT LETTER FOR $165 MILLION IN SECURED DEBT FINANCING TO BRING ITS SECOND GOLD MINE INTO PRODUCTION

Teranga Gold Corp. has received a commitment letter from Taurus Funds Management Pty. Ltd. setting forth a secured development finance facility.

The facility includes provision for the following:

  • $165-million to be used toward financing the development of the Wahgnion gold project and to repay all of the company's current outstanding bank debt, totalling $15-million drawn on its revolving credit facility;
  • $25-million to be used toward future advancement of a feasibility study for the Golden Hill project;
  • $10-million equipment lease facility carve out for which the company has received a number of term sheets and is currently evaluating.

"We are very pleased to be partnering with Taurus to deliver on our vision of becoming the next multiasset mid-tier gold producer in West Africa," said Richard Young, president and chief executive officer. "Together with our cash on hand and free cash flows from our flagship Sabodala mine, we expect to have sufficient financial resources to bring Wahgnion, our second gold mine, into production and continue to advance Golden Hill through feasibility."

Construction at Wahgnion began last fall with an early works program. Mill construction is scheduled to commence in the second quarter of 2018. Wahgnion is expected to increase the company's annualized gold production by 50 per cent to between 300,000 and 350,000 ounces following first pour, which is anticipated by the end of 2019.

Golden Hill is one of West Africa's most exciting and rapidly advancing gold exploration projects. With multiple discoveries over the last year, Golden Hill now has five advanced prospects and numerous exceptional intercepts of high-grade, near-surface gold. An initial resource estimation for the most advanced prospects is planned for year-end 2018.

Both Wahgnion and Golden Hill are located in Burkina Faso, one of the world's fastest-growing gold regions.

Teranga first executed a project finance mandate with Taurus in November, 2017, following a competitive selection process supported by the company's independent financial adviser, Cutfield Freeman and Co. The facility is anticipated to close in the second quarter of 2018.

In commenting on the facility, Taurus chief investment officer, Michael Davies, said: "We are delighted to be working with the board and management of Teranga as the company continues to evolve and diversify its operations away from being a single-asset company to a multiasset producer. The proven operational ability of the Teranga team, as demonstrated though its Sabodala operations, will see the company continue to evolve and grow and Taurus looks forward to being part of that story."

Taurus completed its technical due diligence process in February, 2018, and committed to the facility subject to the term details outlined below. The terms of the definitive documentation in respect of the facility remain subject to negotiation and there is no guarantee that a transaction will be consummated with Taurus or the terms upon which such transaction may be consummated.

Wahgnion tranche ($165-million):

  • Interest rate of 8.75 per cent per annum on drawn amount, paid quarterly in arrears;
  • Principal repayments commence in the quarter ending March 31, 2020, followed by 10 quarterly repayments commencing July 31, 2020, and a bullet repayment on Dec. 31, 2022;
  • Early repayment permitted at any time without penalty;
  • Conditions precedent to drawdown principally: execution and delivery of the facility documents, lodging of security documents and obtaining all requisite consents;
  • The company to enter into an offtake agreement for 1,075,000 ounces of Wahgnion production pursuant to which the company will receive the prevailing spot price subject to an agreed upon quotational period;
  • Upon execution of the facility agreement, and subject to Toronto Stock Exchange approval, Taurus will be granted two million unlisted four-year warrants to acquire Teranga common shares at an exercise price that is the greater of:
    • Teranga's volume-weighted average share price on the TSX for the five trading days prior to the date of execution of the facility agreement;
    • 120 per cent of the Teranga's volume-weighted average share price on the TSX for the 20 trading days prior to the date of execution of the facility agreement.

Golden Hill tranche ($25-million):

  • Interest rate of 8.75 per cent per annum on drawn amount, payable quarterly in arrears;
  • Bullet repayment on Dec. 31, 2022;
  • Early repayment permitted at any time without penalty;
  • Conditions precedent to drawdown including the completion of a satisfactory preliminary economic assessment of Golden Hill as well as customary conditions precedent similar to the Wahgnion tranche.

About Teranga Gold Corp.

Teranga is a multijurisdictional West African gold company focused on production and development, as well as the exploration, of more than 5,000 square kilometres of land, located on prospective gold belts. Since its initial public offering in 2010, Teranga has produced more than 1.4 million ounces of gold from its operations in Senegal, which as of June 30, 2017, had a reserve base of 2.7 million ounces of gold. Focused on diversification and growth, the company is advancing its Wahgnion gold project, with a recently released positive feasibility study, and conducting extensive exploration programs in three countries: Burkina Faso, Senegal and Ivory Coast. Teranga has a strong balance sheet and the financial flexibility to execute on its growth strategy.

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