Asanko Gold enters $150 million debt facility to fund Esaase project

By Jennifer Chiou

New York, Oct. 24 - Asanko Gold Inc. announced that it has entered into a definitive senior facilities agreement with a special-purpose vehicle of Red Kite Mine Finance Trust I that provides for a $150 million secured project debt facility.

The debt facility is comprised of a $130 million term loan and a $20 million cost overrun facility.

Combined with cash on hand, proceeds will be used to fund the development, construction and working capital requirements of the $185 million Esaase Gold project.

According to a news release, there are no gold hedging provisions or cash sweep requirements or restrictions.

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.

Borrowings under the cost overrun facility will bear interest at Libor plus 1,000 bps, with a 1% Libor floor. There is a 1.5% arrangement fee payable on execution and a 3% fee payable on drawdowns.

The release added that there is a two-year principal and interest payment holiday for the term loan and cost overrun facility.

In addition to the credit agreement, 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.

"I am delighted to announce that the Esaase Gold project is now fully financed through construction and commissioning, including working capital," president and chief executive officer Peter Breese said in the release.

"Our intention is to start the front-end engineering and design program before year-end and construction in Q1 2014 to achieve our target of steady state production of 200,000 ounces per year by Q4 2015."

Asanko stated that its vision is to become a mid-tier gold mining company with its immediate focus on near-term gold production in Ghana, West Africa. The company is based in Vancouver, B.C.

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