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Regis Resources Ltd

Regis Resources teams up with Macquarie Bank to advance Duketon Gold Project

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Gold-focused company Regis Resources (ASX: RRL) has accepted a formal offer from Macquarie Bank for a project loan, gold hedging and performance bond facilities for the Duketon Gold Project.

The offer includes a debt facility of $45 million, hedging facility of up to 300,000 ounces of gold and a performance bond facility of $5 million.

Shares in the Perth-based company last traded at 52c on the Australian Stock Exchange.

The debt facility will be applied towards the development cost of the Duketon Gold Project which is forecast at $73 million.

The drawdown of the debt facility is not expected to be required until the March 2010 quarter, with development of the DGP is on schedule for commissioning and first gold production in the September 2010 quarter.

The debt facility will be provided in two tranches, the first for $40 million and the second for $5 million.

Tranche two is a standby facility. The loan amortisation schedule requires full repayment of the debt facility by June 2014 however the company anticipates earlier repayment.

The gold hedging facility will be available to the company on execution of security documentation and satisfaction of a limited number of the facility conditions precedent.

Drawdown of the loan facility is subject to usual conditions precedent, including the completion of a gold hedging programme of 150,000 ounces. Gold reserves at the DGP are currently 603,584 ounces.

Regis managing director Mark Clark said the company would also  proceed with an equity issue to complete the funding of the development cost of the DGP along with exploration costs and working capital requirements.

The structure and timing of the equity issue will be advised to the market shortly.

“The Company has been able to negotiate very competitive debt financing terms for the development of the Duketon Gold Project," Mr Clark added.

"This is a reflection of Macquarie’s confidence in both the Regis management team and the robustness of the Duketon Gold Project. The negotiation of the debt facility, along with the imminent completion of the equity issue, marks the start of Regis’ long awaited transition from explorer to gold producer.”

Quick facts: Regis Resources Ltd

Price: $4.80

Market: ASX
Market Cap: $2.44 billion
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