ASANKO Gold said it was debt free after concluding a joint venture agreement with Gold Fields in which it will be paid $165m in upfront cash with the balance of $20m to be paid no later than December 31, 2019.
In terms of the joint venture, unveiled by Gold Fields on March 29, Asanko Gold sold a 50% stake in Asanko Gold Mines (AGM), its Ghanaian subsidiary. The amount is enough to retire $164m in debt which at LIBOR of 6% was expensive.
Gold Fields also participated in the recapitalisation of Asanko Gold, subscribing for shares through a rights issue giving it a 9.9% stake for $17.6m. All in all, Gold Fields is spending $202.6m for roughly 100,000 oz of gold annually on current production metrics.
Peter Breese, president and CEO of Asanko Gold, said the company would now “emerge debt-free, with a strong partner, a solid long life production base, competitive cost profile, fully funded organic growth and significant exploration potential”.
The debt was provided by Red Kite which had provided some $150m in 2013 for Asanko Gold’s $286m Asaase gold mine. The loan deal was structured around an off-take agreement in which its subsidiary, Re Kit Mine Finance, had a nine day window in which to pay the lowest gold price once the gold has been shipped to a refinery.