Asante Gold announces $525 million financing to support Ghana growth plans
Asante Gold (CSE: ASE) said on Wednesday it is expected to raise $525 million in two stages to fund its growth plans in Ghana, where it operates the Bibiani and Chirano gold mines and advancing the Kubi gold project.
The first stage will include Asante’s recently announced $100 million equity private placement, plus an approximate $100 million refinancing with Kinross Gold (TSX: K), a $75 million bond funded by Ghanaian investors and a $50 million syndicated gold stream facility.
The first round funding of $325 million would allow the company to proceed with key capital projects to upgrade its mining operations. These include a pit expansion and a new sulphide plant at Bibiani, equipment upgrades at Chirano, as well as underground development at both sites.
The second stage will include a $150 million senior debt facility, to be arranged by FirstRand Bank, and a $50 million standby equity commitment from an unnamed strategic investor, for a total of $200 million.
“Completion of this comprehensive financing package will mark a breakthrough moment in Asante’s history. It will transform our balance sheet and support execution of our growth plan to achieve gold production above 500,000 ounces per year by 2028,” commented Dave Anthony, Asante’s CEO.
The company’s plan is to organically grow its gold production through improvements at Bibiani and Chirano, tapping into the approximate 6.6 million oz. in gold resources held across the two mines.
Financing details
As announced early September, the company plans to issue approximately 90.7 million of its Canadian-listed common shares at C$1.50 per share via a three-tranche private placement. The first tranche totalling $25 million closed this week. The remaining tranches ($35 million and $40 million) are expected to close in November and December, respectively.
The $100 million refinancing with Kinross relates to Asante’s acquisition of a 90% interest in the Chirano mine. Under the refinancing terms, Asante will make a cash payment of $65 million toward the unpaid deferred consideration owed by the company, and finalize the replacement of a letter of credit in support of reclamation obligations for Chirano. The transaction would result in Kinross increasing its shareholding in Asante to 9.9%.
The $75 million bond is envisaged to have a maturity of six years, with quarterly payment of interest in cash during the entire term of the loan and amortization of principal during the final year. The bond will be denominated in Ghana cedis, with the principal balance indexed to the US dollar exchange rate post-closing.
Under the $50 million gold stream agreement, Asante is anticipated to sell 1.25% of payable gold sold from the Bibiani and Chirano mines at 20% of the prevailing market price. The stream is anticipated to contain provisions for a 50% buyback.
Asante said it expects to complete these transaction comprising the first stage financing by the end of 2024.
Asante Gold’s shares rose 3.0% to C$1.36 apiece by 1:00 p.m. ET following the financing announcement, for a market capitalization of C$605.7 million.