Asanko Gold amends $150 million debt facility following acquisition

By Lisa Kerner

Charlotte, N.C., April 15 - Asanko Gold Inc. announced it has agreed to terms to amend its existing project debt facility with a special-purpose vehicle of Red Kite Mine Finance Trust I, reflecting the company's plans to develop phase 1 of the Asanko Gold Mine.

The terms of the amended agreement will be "substantially similar" to the agreement announced in October for a $150 million secured project debt facility for the Esaase Project.

Following the acquisition of PMI Gold Corp. in February, Asanko merged the two assets into the Asanko Gold Mine.

Asanko does not have to pay any costs to Red Kite to transfer the facility to phase 1 of the Asanko Gold Mine, according to a company news release.

Definitive agreements are expected to be executed during the second quarter.

Debt facility terms

The debt facility is comprised of a $130 million term loan and a $20 million cost overrun facility, and there are no gold hedging provisions or cash sweep requirements or restrictions.

The terms of the amended agreement are substantially similar to the Oct. 24 agreement, the release stated.

Borrowings under the term loan will bear interest at Libor plus 600 basis points, with a 1% Libor floor. In addition, there is a 1.5% arrangement fee payable on execution and a 1.5% fee payable on drawdowns. Asanko will be required to make the first drawdown upon execution of the definitive amendment agreement and to draw a total of $60 million by the end of 2014.

Borrowings under the cost overrun facility will bear interest at Libor plus 1,000 bps, with a 1% Libor floor. There is a 3% fee payable on drawdowns and a three-year quarterly repayment schedule.

Also, Asanko and Red Kite entered into an offtake agreement under which the company has agreed to sell the gold from Esaase for the life of the mine to Red Kite at spot prices during a nine-day quotational period following shipment.

Phase 1 is expected to provide 220,000 ounces of gold per year for the first five years of operation starting in 2016 and is fully financed from Asanko's cash balance of $255 million plus the $150 million debt facility, according to president and chief executive officer Peter Breese.

Asanko is a mid-tier gold mining company based in Vancouver, B.C.

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