Catalpa Resources (ASX:CAH) has agreed the terms of a credit approved Project Finance Facility for the Edna May Gold Project.
The Facility which is underwritten by Macquarie Bank Limited is a significant milestone in the development of the Edna May Gold Project. The Facility comprises a secured loan of up to A$55M, a standby mezzanine facility of up to A$10M, a A$2.5M performance bond facility and a gold hedging facility. The term of the Facilities concludes in the 2015 financial year.
The Facility raises a significant portion of the A$92m required to develop the Edna May project. Bruce McFadzean, Catalpa Resources’ Managing Director commented: “This is a significant milestone in the
recommencement of gold production at the Edna May Gold Project. The Project has exceptional economics at a gold price of A$1,544 per ounce, which is forecast to realise an average annual cash operating margin of A$90 million (post royalty).
Catalpa’s mine and processing schedule demonstrate average gold production in excess of 100,000 ounces recovered per annum for a life of mine of more than six years. This provides a significant platform to grow
a mid tier gold production company. The strong cash flow forecast from the Edna May Project will enable Catalpa to expand through exploration and acquisition.”
Under the hedging facility, Catalpa has sold forward 352,316 ounces of gold at an achieved fixed flat forward price of A$1,544 per ounce for delivery from commencement of operations, into the 2015 financial year. This represents 24% of Edna May’s Resource and is prior to an update to the Greenfinch Resource and Reserve expected in April 2009 (as contemplated in the ASX announcement of 18 February 2009).
Equity raising
To assist completion of the project funding, Catalpa’s major shareholder, Lion Selection (ASX:LST) has indicated that, subject to finalisation of the offer terms, including a minimum of $30M equity raised, it is prepared to contribute A$15M of this amount. Catalpa has engaged Austock Corporate Finance Pty Limited to manage the equity raising.