The Engagement Letter sets forth the steps under which the mandated banks are appointed to arrange a senior loan for the Karma Project of up to US$90 million, True Gold’s debt financing target. Steps include agreement on final terms, conditions and requisite documentation for the Senior Debt Facility; completion of due diligence; and procurement of credit approvals.
True Gold’s financing strategy is based on a combination of the Senior Debt Facility, equipment financing, equity and off-take partner contributions. The Company is pursuing all financing options concurrently, providing maximum flexibility for True Gold to reach its debt financing target and obtain all capital required to develop the Karma Project.
"The engagement letter with Barclays and SGCIB, two leading international investment banks with proven financial capabilities, represents another important step towards developing the Karma Project," said Mark O’Dea, Executive Chairman, True Gold. "We believe that the Karma Project’s low costs, rapid payback period, low technical risks and solid economics make it a superior candidate for financing from the international banking community."
"From the beginning, our mine development and operations team have designed the Karma Project to maximize profitability, generate strong early cash flow, minimize technical risk and manage both capital and operating costs," added Dwayne Melrose, President and CEO, True Gold. "By moving forward with Barclays and SGCIB now, we ensure that financing keeps pace with ongoing advancements at the Karma Project in key areas such as detailed engineering and design, the construction of mine-related facilities such as the barrage, and permitting."
The Burkina Faso Council of Ministers approved the Karma Exploitation (mining) Permit in December 2013. It awaits the President’s final signature.
True Gold recently released the results of an independent Feasibility Study for the Karma Project. The results support a technically simple, open-pit heap-leach project with 1.4-year payback and 43.1% IRR (after-tax) at US$1250 an ounce gold(1). Feasibility Study results confirm that the Karma Project is scalable, with the ability to process discoveries from ongoing exploration.
Barclays Bank PLC is a premier full service global investment bank with one of the most established mining and metal franchises in the industry and in Africa. Barclays provides a broad spectrum of financial services and solutions to the mining and metals industry comprising advisory, financing and risk management and includes a commodities business ranked in the top three globally.
Société Générale Corporate & Investment Banking is a well-diversified and leading player with a global reach in the mining sector providing financing and advisory services within its natural resources and energy financing group. SGCIB has considerable experience in the West Africa region and the group is present in Burkina Faso via its local subsidiary.
