The appointment of a lead banker and syndication manager brings Bema Gold (TSE) one step closer to arranging financing for its 50% owned Refugio gold project in Chile.
Sharps Pixley, the bullion trading and mine finance arm of the London-based merchant bank Kleinwort Benson, has committed to fund 20% of a US$75-million syndicated gold loan.
The gold loan carries an interest rate of the cost of gold plus 2.5% during the 18-month construction period, dropping to cost plus 2% when the operation goes into production. Based on the current cost of gold, interest rates would be 3.25% and 2.75% respectively.
Pixley’s commitment is subject to a number of conditions including completion of syndication, Chilean government approvals, and a market price of gold in excess of US$350 per oz. at the time of closing.
The financing is currently scheduled to close March, 1992, at which time Bema would draw down the loan and start construction.
The total cost to bring Rufugio into production is estimated at US$130 million including a capital cost of US$101 million, plus working capital and financial costs of US$29 million.
Bema plans to raise the balance of the production financing through US$25 million in lease financing on mining equipment and US$30 million in equity financing. The equity portion will be contributed equally by Bema and its Chilean partner.
Don Halliday, a spokesman for Bema, said the company plans to do the equity financing in January or February next year.
Bema currently has about 30.4 million shares outstanding, and as at June 30 had working capital of $1.4 million plus long-term debt totalling $16.7 million.
The Refugio has an open pit minable reserve of 112 million tons grading 0.030 oz. gold per ton at a strip ratio of 1-to-1. The feasibility study on the project calls for a 33,000-ton-per-day operation which would produce an average of 233,000 oz. gold at an estimated operating cost of US$189 per oz. over the mine’s 9.4-year life.
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