TIDMCORA
RNS Number : 2958Q
Cora Gold Limited
18 June 2020
Cora Gold Limited / EPIC: CORA.L / Market: AIM / Sector:
Mining
18 June 2020
Cora Gold Limited ("Cora Gold", "Cora" or "the Company")
US$21m Term Sheet to Fund the Construction of Sanankoro Gold
Project, Mali
Cora Gold Limited, the West African focused gold company, is
pleased to announce that it has signed a US$21m mandate and term
sheet with investment firm, Lionhead Capital Advisors Proprietary
Limited ('Lionhead'), to fund the future development of its
flagship Sanankoro Gold Project ('Sanankoro' or 'the Project') in
Southern Mali (the 'Project Financing'). This is conditional on,
among other matters, the completion of a Definitive Feasibility
Study ('DFS') on the Project before the end of 2021.
Lionhead is acting as lead investor and arranger on behalf of a
consortium of investors including the founders of LionOre Mining
International Ltd (which was bought by Norilsk Nickel for US$6.3bn
in 2007), as well as the initial investors in Mantra Resources
Limited (which was bought by ROSATOM for AUD$1.2bn in 2010). Paul
Quirk, a non-executive director of Cora Gold, is a founding partner
and director of Lionhead. The Quirk Family are potential
beneficiaries of trusts that own around 34% of Cora Gold through
Brookstone Business Inc and Key Ventures Holding Limited.
Highlights
-- US$21m Term Sheet to finance the development of Sanankoro on completion of a positive DFS
o US$6m Equity Financing
o US$5m Convertible Loan Note
o US$10m Debt Financing
-- Term Sheet requires Cora to deliver a DFS with a minimum of:
o 6 years mine life of 40,000 ozs/year gold production
o 60% Internal Rate of Return ('IRR') based on a US$1,400/oz
gold price
-- Sanankoro Scoping Study (January 2020, US$1,400/oz gold price) results:
o US$20.6m Pre-Production Capex
o +US$19m/year free cash flow and an 84% IRR
o 45,000 ozs/year average production
-- Current focus remains on resource growth with a DFS planned during 2021
Bert Monro, CEO of Cora Gold, said, "The term sheet is fantastic
news for Cora and importantly, significantly de-risks the Sanankoro
Gold Project. The US$21m Project Financing will fund the Sanankoro
Gold Mine based on our Scoping Study economics, following
completion of a positive DFS by the end of 2021. This is a very
strong endorsement for Sanankoro from an investment group linked
with our largest shareholder and a consortium of highly experienced
and successful natural resources investors on competitive terms.
Sanankoro has the potential to be a highly profitable oxide mine
with the Scoping Study highlighting an average free cash flow of
US$24m per year and a 107% IRR at a US$1,500/oz gold price.
"With a supportive shareholder base keen to build production, an
existing defined resource with significant scope to expand, and a
positive gold price environment, we are extremely excited about
Cora's future. There is a lot of work still to be done and our team
is focussed on delivering on it."
Term Sheet details:
-- Equity Financing: US$6m subscription for new ordinary shares
of no par value each in Cora at an 8% discount to the 30-day volume
weighted average price ('VWAP') at the time of issue post DFS
completion (the 'Equity Financing')
-- Convertible Financing: US$5m investment in a Convertible Loan Note:
o Coupon: 10% per annum
o Conversion: The total amount outstanding under the Convertible
Loan Note (including interest) shall be converted, at the election
of Lionhead at any time prior to the 3rd anniversary of the issue
of the Convertible Loan Note, into ordinary shares in Cora at a 30%
premium to the US$6m Equity Financing price
o Repayment: Repayable on the 3rd anniversary of advance date if
not converted, or earlier, at the option of the holder, in the case
of: (i) a change of control of Cora; or (ii) the merger or sale of
Cora (including the sale of substantially all of the assets of the
Company) at a 30% premium to the Equity Financing price. (together,
the 'Convertible Loan Note')
-- Debt Financing: US$10m debt funding:
o Term: 4 years from advance
o Repayment: Repayable in quarterly instalments commencing at
the end of the first quarter following the second anniversary of
the advance
o Interest: 10% per annum, payable quarterly in arrears
o NSR: Net Smelter Return Royalty ('NSR') of 1% until 250,000
ozs of gold have been produced from the Project. Cora may purchase
and terminate the NSR at any time for US$2m payment.
o Right of First Refusal: If the Company receives an offer from
a third party to provide a loan in a similar or amount greater than
US$10m, on better terms than provided above, then Lionhead shall
have the right to equal the terms offered by the third party. If
Cora accepts debt from another party a US$200,000 (2% of Lionhead
Debt Financing) fee will be payable to Lionhead. If the mandate
agreement terminates, no fee shall be payable if debt is raised 4
months after the termination, (together, the 'Debt Financing')
A fee equal to 1% of the US$21 million Project Financing shall
be paid by the Company to Lionhead on completion of the US$6m
Equity Financing.
Related Party Transaction
In accordance with the AIM Rules for Companies the Project
Financing is deemed to constitute a related party transaction. With
the exception of Paul Quirk who is precluded from opining, Cora's
directors consider, having consulted with its nominated adviser,
that the terms of the proposed Project Financing are fair and
reasonable insofar as the Company's shareholders are concerned.
Further Details
Cora Gold is advancing a portfolio of gold projects including
its flagship project, the Sanankoro Gold Project in Yanfolila Gold
Belt, Mali ('Sanankoro' or 'the Project'). Results from an initial
Scoping Study published in January 2020 demonstrated that Sanankoro
has the potential to be a highly profitable oxide mine, delivering
a short payback of 18 months with an annual production rate of
circa +45,000 ozs of gold for an average free cash flow of over
US$19m and an 84% IRR at a US$1,400 gold price. These returns
increase to US$24m annual free cash flow and 107% IRR at a US$1,500
gold price. Notably, the current pit-constrained Resource is based
on a small portion, less than 25%, of the mineralised strike
length, which gives the Company a good expectation of a significant
Resource increase over time.
The Company's strategy is to move into production as quickly as
possible. Cora's current focus is both on resource growth, to
enable a +6 year mine life, as well as additional metallurgical
test work studies. The Company plans to move into Feasibility Study
work during 2021 with the aim of completing a DFS before the end of
that year with a view to commencing mine construction at Sanankoro
in 2022.
** ENDS **
For further information, please visit http://www.coragold.com or
contact:
+44 (0) 20 3239
Bert Monro / Jon Forster Cora Gold Limited 0010
Ewan Leggat / Charlie SP Angel +44 (0) 20 3470
Bouverat (Nomad & Joint Broker) 0470
Turner Pope Investments +44 (0) 20 3657
Andy Thacker / Zoe Alexander (Joint Broker) 0050
Megan Dennison / Susie St Brides Partners +44 (0) 20 7236
Geliher (Financial PR) 1177
Notes
Cora Gold is a gold exploration company focused on two world
class gold regions in Mali and Senegal in West Africa. Historical
exploration has resulted in the highly prospective Sanankoro Gold
Discovery, in addition to multiple, high potential, drill ready
gold targets within its broader portfolio. Cora's primary focus is
on further developing Sanankoro in the Yanfolila Gold Belt
(Southern Mali), which Cora believes has the potential for a
standalone mine development. Sanankoro has a positive Scoping Study
published on it showing an 84% IRR and US$30.9m NPV at a US$1,400
gold price. Cora's highly experienced management team has a proven
track record in making multi-million-ounce gold discoveries, which
have been developed into operating mines.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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