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US$40 million debt financing facility secured for construction of Tuvatu Gold Project

Published by , Assistant Editor
Global Mining Review,

Canadian development and exploration company Lion One Metals Ltd (Lion One) has entered into an indicative term sheet with Sinosteel Equipment & Engineering Co., Ltd. (Sinosteel) of China and Baiyin International Investment Ltd. (Baiyin).

According to Lion One, the agreement incorporates an EPC and gold doré offtake financing facility totalling US$40 million (the Facility) for mine development and construction of the processing plant for its 100% owned and fully permitted Tuvatu Gold Project, located near the Nadi International Airport in the Republic of Fiji.

Lion One intends to engage Sinosteel as the project EPC Contractor and Baiyin as the doré off-taker, and be provided with a US$40 million facility. Closing of the facility is subject to satisfactory due diligence, board approvals, and final documentation, with closing expected to close in the third quarter of 2018.

Highlights of the facility include the following key terms:

  • Term of 5 years at annual interest rate of 7.5%.
  • Principal holiday and capitalised interest for the earlier of 2 years from first draw, or 3 months after achieving commercial production, followed by 12 equal quarterly repayments.
  • Net Smelter Return (NSR) royalty of 2.25% on the first 350 000 oz of gold produced.

Lion One will have the option, subject to mutual agreement, of increasing the principal of the Facility by an additional US$10 million with the same interest rate, repayment schedule, security, and pro-rata royalty as the facility. Lion One will also have the right to obtain a new facility of up to US$10 million freely, provided it is not secured against the security under the facility.

Chairman and CEO of Lion One, Walter H. Berukoff, commented: “We are pleased to cooperate with Baiyin and Sinosteel for the long-term financing, which will provide low-cost capital and maximum flexibility in the development of Fiji’s next high-grade gold project at Tuvatu.”

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