RESOLUTE Mining completed the refinance of its balance sheet, announcing today a $300m syndicated loan that lowers the group’s borrowing costs and positions it for growth.
Resolute CEO, John Welborn said the undrawn balance of the new loan would increase as the firm generated free cash throughout 2020.
The loan will be used to refinance $63m in project finance for construction of the Mako Gold Mine in Senegal, and to replace $195m in existing senior bank debt facilities. The $300m facility comes with interest payable of LIBOR plus a margin of 4%.
“We now have a simple low-cost flexible senior debt package which reduces our borrowing costs, provides immediate liquidity, and will provide important flexibility for the funding of future growth initiatives,” Welborn said.
The refinance consists a three-year $150m revolving credit facility and a four-year $150m term loan facility. A fleet of lenders were involved in putting the loan together including BNP Paribas, Citibank and the South African banks, Investec and Nedbank. ING Group and Société Générale also joined the syndication.
Resolute said the facility simplified its capital structure by removing restrictive conditions of the project finance loan facility that had been installed for Mako, an asset Resolute secured with the $274m purchase in July of Toro Gold.
Drawdown under the facility is expected to occur during next week and will be drawn to about $250m to enable the complete repayment of the Mako project loan facility. As a precursor to refinancing the project loan Resolute has terminated a $12m royalty previously agreed by Toro Gold, and completed repayment of the $130m bridge facility used to buy Toro Gold.
“As such, the full benefit of Mako’s positive cashflows will now be available to Resolute,” Welborn said, adding that this would improve the group’s cash generative ability.
“We expect the undrawn capacity of the facility to increase during 2020 as we generate positive cashflows from Syama and Mako and pay down debt. We look forward to working with our banking group to create further value for our shareholders,” he said.
Welborn said in August last year the company was on a growth trajectory. “We have unbounded enthusiasm for the sector and not because the gold price has been running,” he said at the time. “We are ready to grow and we are coming at you.”
Resolute has since sold its sold its Ravenswood mine in Australia so it can focus on African gold production, and locked in revenue by selling forward some 215,000 ounces of gold production – about half of projected 2020 output.
