Gold One raises $65m loan

[miningmx.com] — GOLD One International has finally organised the debt facility required to cover its exposure to a $62.5m convertible bond which matures in December 2012.

Holders of that bond have a “put’ option in terms of which they could opt for repayment in December this year.

That liability and the delay experienced by Gold One in arranging finance to cover it were viewed by analysts as the reasons the Gold One share price has performed so poorly this year.

Gold One shares had fallen from a 12-month high of 244c on the JSE to around 181c by early June from which they have recovered to current levels around 193c.

That’s despite the facts that the rand gold price has moved steadily upwards to current levels above R300,000/kg by early June while Gold One has successfully opened its new Modder East mine.

Modder East is now ramping up production targeting a steady state output of between 150,000oz and 180,000oz from 2011.

CEO Neal Froneman reckons Modder East is a base from which the group can develop two other South African gold projects – Ventersburg in the Free State and the so-called “Megamine’ on the Far East Rand based on the old Spaarwater, Vlakfontein, West Vlakfontein and Sub Nigel operations.

A statement released on Wednesday morning by Gold One said it had executed a mandate and term sheet for a $65m debt facility with Absa Capital and BNP Paribas.

It added the signing of the term sheet, “follows several months of financial, legal and technical due diligence by Absa Capital and BNP Paribas in relation to Gold One and its Modder East gold mine which will serve as security for the debt facility.

“The $65m facility will ensure Gold One has the capacity to refinance all its convertible bonds should some or all of the bondholders exercise their once-off put option in December 2010.’

Froneman commented, “the signing of the term sheet not only demonstrates our ability to raise corporate debt but also provides independent third party validation of the technical fundamentals of Gold One and its Modder East gold mine.’