Australian development and exploration company OreCorp has received indicative debt funding proposals for the development of its Nyanzaga gold project in Tanzania.
The company said that major European, African, and Tanzanian banks are interested to provide more than $400m in debt financing for the Nyanzaga project.
It exceeds OreCorp’s target of obtaining $300m debt financing, in consultation with its financing advisor Auramet International.
In August this year, the project provided a positive definitive feasibility study (DFS) and is estimated to produce 242,000 ounces of gold per year for 10 years, at a cost of $954 per ounce.
The positive DFS has confirmed the Nyanzaga project’s debt-carrying capacity and flexibility, said OreCorp.
Together with Auramet, the company is still in talks with several other financial institutions, including global Export Credit Agencies, to secure syndicated debt funding for the project.
Auramet representative Mark Tyler said: “We are extremely pleased with the overwhelming response received from financiers who have indicated interest in participating in a syndicated debt facility for the development of Nyanzaga.
“We look forward to working with OreCorp to finalise an optimal funding outcome that works for the company and the project.”
According to OreCorp, recent positive legislative changes in Tanzania have resulted in the reduction of the royalty rate from 6% to 4% in certain circumstances.
The company is further exploring ways to mitigate the reduced royalty rate by implementing other arrangements that may complement, enhance, or partially replace the debt financing.
It has entered initial discussions with credit funds, royalty, and streaming providers, which showed strong interest in the project, said the company.
OreCorp executive chairman Matthew Yates said: “We are pleased with the strong interest we have received to date from banks with respect to financing the Project.
“The expressions of interest received give us further confidence in our ability to deliver on a comprehensive financing package for the project which meets our objectives of prudently managing leverage and minimising dilution to the company’s existing shareholders.
“We intend to further advance discussions with banks and other capital providers to ensure we have maximum flexibility to secure financing for the project in the prevailing market conditions.”
