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Galane Gold Ltd. (TSXV:GG) has entered into a US$5 million loan facility and gold prepayment agreement with Samsung C&T U.K. Limited. The facility is expected to close on or near August 29, 2014, subject to certain conditions and precedent.
As quoted in the press release:
Pursuant to the agreement, Samsung has agreed, subject to certain conditions, to provide a US$5m loan facility to Galane Gold in return for the sale and delivery by the Company’s Botswana operating subsidiary, Mupane Gold Mining (Pty) Ltd. (“Mupane”), of a minimum of 1,607 ounces of gold per month for a period of two years (38,568 ounces in aggregate) payable by Samsung at a fixed discount rate to the then prevailing spot price upon delivery. Samsung is also provided with the further exclusive option to purchase all gold produced by Mupane above 1,607 ounces per month on a non-discounted basis at the then prevailing spot price for such two year period. The loan facility is repayable by the Company over the two year period by way of 18 equal principal payments commencing seven months after the initial advancement of the facility. The facility shall be secured first by a pledge of the shares of Mupane and then replaced with a first charge against the assets of Mupane. Using recent industry forecasts on gold price, it is anticipated that the arrangement will have an approximate cost of capital of 9.1% per annum. The arrangement requires neither hedging nor share dilution.
Galane Gold chairman and acting CEO, Ravi Sood, said:
After a period of thorough strategic, technical, legal, financial and management due diligence of Galane Gold by Samsung, we are very pleased to have entered into this arrangement which demonstrates Samsung’s support for our company. We are optimistic that this initial arrangement will pave the way for additional collaboration in the future.
Click here to read the Galane Gold Ltd. (TSXV:GG) press release
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