West African focused gold mining company Cora Gold (AIM:CORA) announced on Thursday that it had secured a $21 million mandate and term sheet with investment firm Lionhead Capital Advisors, to fund the development of its Sanakoro Project in Southern Mali.
Lionhead will act as the lead investor and arranger on behalf of the consortium of investors involved, including the founders of LionOre Mining International Ltd (MCX:GMKN) and the initial investors in Mantra Resources Limited (ASX:MRU). Non-Executive director of Cora Gold, Paul Quirk, is also a founding partner of Lionhead, with the Quirk family being ‘potential beneficiaries’ of trusts that own around 34% of Cora Gold through a combination of Brookstone Business Inc and Key Ventures Holding Limited.
The $21 million Term Sheet confirmed on Thursday is comprised of US$6 million in equity financing, a US$5 million convertible loan note and US$10 million debt financing.
The Term Sheet is conditional – among other considerations – on Cora completing a Definitive Feasibility Study on the Sanankoro Project before the end of 2021. The DFS must deliver a minimum of 6 years mine life of 40,000oz per year of gold production and a 60% IRR based on a $1,400/oz gold price.
Citing its January 2020 Sanankoro Scoping Study, the company recorded US$20.6 million pre-production capex, a $19 million per year free cash flow and an 84% IRR, alongside a predicted 45,000oz per year average production volume.
Responding to the Term Sheet news Cora Gold CEO Bert Monro commented:
“The term sheet is fantastic news for Cora and importantly, significantly de-risks the Sanankoro Gold Project. The US$21m Project Financing will fund the Sanankoro Gold Mine based on our Scoping Study economics, following completion of a positive DFS by the end of 2021. This is a very strong endorsement for Sanankoro from an investment group linked with our largest shareholder and a consortium of highly experienced and successful natural resources investors on competitive terms. Sanankoro has the potential to be a highly profitable oxide mine with the Scoping Study highlighting an average free cash flow of US$24m per year and a 107% IRR at a US$1,500/oz gold price.”
“With a supportive shareholder base keen to build production, an existing defined resource with significant scope to expand, and a positive gold price environment, we are extremely excited about Cora’s future. There is a lot of work still to be done and our team is focused on delivering on it.”
Following the update, Cora Gold shares bounced 4.33% or 0.32p to 7.82p per share 18/06/20 15:58 BST. This is up from its 4.25p nadir seen in mid-March