Etruscan secures US$28.5MM Youga gold mine debt financing
Youga is 90% owned by Etruscan.
This is gold mine #2 for EET. Samira Hill has been in production and exceeding target forecasts for 18 months now.
biz.yahoo.com
Etruscan secures debt financing and awards engineering contract for the Youga Gold Mine
Monday March 6, 10:35 am ET
WINDSOR, NS, March 6 /CNW/ - ETRUSCAN RESOURCES INC. (EET.TSX) announced today that it has accepted an offer of debt financing for US$28.5 million. The US$28.5 million debt facility arranged by RMB Resources Limited and provided by the FirstRand Bank Group of South Africa and Macquarie Bank Limited of Australia will be used to fund construction of the Youga Gold Mine located in Burkina Faso, West Africa. Etruscan also announced the selection of GBM Projects Limited of London, England to complete the detailed design engineering of the processing plant for the 88,000 ounce per annum Youga Gold Mine.
Youga Debt Facility
The Youga debt facility is comprised of a US$28.5 million secured project loan with an unmargined gold price protection program to be provided by FirstRand and Macquarie. The facility was offered after completion of a thorough technical and legal review, and bank credit committee approvals. The loan is structured as a limited recourse facility to Etruscan until technical completion conditions are achieved when it becomes non-recourse project financing. Standard project finance security provisions apply with the facility being repayable on a quarterly basis over a 4-year term. Initial drawdown of the facility is anticipated mid-2006 upon satisfaction of conditions precedent, completion of formal financing agreements and the establishment of an options related price protection program securing a minimum price of US$500 per ounce for approximately 453,000 ounces of gold. The total project funding requirement to bring the Youga Gold Mine into production including financing costs is estimated at US$44 million and will be funded in part with the loan proceeds.
The gold price protection program will consist of put and call options at zero cost to Etruscan. At a spot gold price of US$565 per ounce and current volatilities, market pricing from hedge facility providers indicates Etruscan can be guaranteed a minimum price of US$500 per ounce over 5 years on the required 453,000 ounces by writing calls for 98,000 ounces at a strike price of US$550 per ounce. This represents only 17% of the life of mine production, leaving 83% of the life of mine production un-hedged. Additional gold reserves delineated at the Youga Gold Project will also be unhedged and available to be sold on the spot gold market.
Youga Processing Plant
GBM Projects Limited of London, England has been retained to complete the detailed design engineering of the processing plant for the 88,000 ounce per annum Youga Gold Mine. The processing plant will be designed as a conventional gravity/CIL (carbon-in-leach) plant with a capacity to treat one million tonnes of ore per annum. The engineering phase is scheduled for completion by August with key construction components starting to be delivered to site throughout the spring and summer. Project completion and the start of gold production are scheduled for the early 2007.
GBM is an engineering company specialising in engineering, procurement and construction management of gold, base metal and industrial minerals ore processing plants and infrastructure. GBM is presently working on a number of projects in Burkina Faso and other francophone West African countries, as well as Russia, Central Asia and the Americas. Recent West African clients include Red Back Mining Inc., Nevsun Resources Ltd., Cluff Gold Plc, Goldbelt Resources Ltd., Axmin Inc., St Jude Resources Ltd. and Semafo Inc. GBM operates under a quality management system which complies with the requirements of BS EN ISO 9001:2000.
Etruscan has appointed Mr. John Tait, P.Eng. as Independent Project Advisor for the design and construction of the Youga Gold Mine. Mr. Tait brings over 40 years of project management and construction experience to Etruscan. He recently served as the Independent Engineer on Etruscan's Samira Hill Gold Mine in Niger. Robert Harris, P. Eng and Vice President Operations for Etruscan is the Qualified Person overseeing the development of the Youga Gold Mine.
Youga Development to Date
During 2005, the Company financed and carried out initial mine development work at Youga, including the upgrading of the 30 kilometer main access road from the Town of Zabre to the mine site, terracing and compaction of the mine site, surveying and clearing of the 11 kilometer long water pipe line route from the site to the year round water supply at the Nakambe River and upgrading of camp and air strip infrastructure. Certain long lead items were also purchased or ordered, including an Allis Chalmers Ball Mill from the Louvicourt Mine in Val d'Or, Quebec. To date, the Company has spent approximately US$3.3 million of the estimated total project financing requirement of US$44 million.
The Youga Gold Mine is located approximately four kilometers north of the Ghanaian border and 180 kilometers southwest of Ouagadougou, the capital city of Burkina Faso. Etruscan holds a 90% interest in Youga, with the Government of Burkina Faso holding the remaining 10%. Youga presently has a mineable gold reserve of 6.6 million tonnes at an average grade of 2.7 grams per tonne containing 580,000 ounces gold. The initial open pit mining operation will be comprised of five pits with the ore being processed over an initial 6.5 year mine life.
Land Position and Exploration Potential
The Youga Gold Project is situated on the Youga Gold Belt which stretches from southern Burkina Faso into Ghana. In Burkina Faso, Etruscan holds the Youga Mining Permit and eight exploration permits which cover 1,075 square kilometers over an 80 kilometer strike length of the Youga Gold Belt. Etruscan also has an option to acquire a 100% interest in two licences covering 773 square kilometers over an additional 40 kilometers of strike length along the southwestern extension of the Youga Gold Belt into Ghana (Bole-Bolgatanga Belt). This strategic land package gives Etruscan the dominant land position along the Youga Gold Belt where management believes there is significant potential for new gold discoveries in addition to the Youga Gold Mine presently being developed.
Etruscan Resources Inc. is a diversified Canadian junior mining company focused on acquiring dominant land positions in district scale gold and diamond belts within Africa. Etruscan has an aggressive exploration strategy and now holds strategic land positions in a number of gold belts covering over 8,200 km2 in five countries in West Africa. The Company also holds interests in lands covering over 5,000 km2 in the Ventersdorp alluvial diamond district in South Africa. The common shares of Etruscan are traded on The TSX Exchange under the symbol "EET". More extensive information on Etruscan can be found on its home page at etruscan.com. |
