RNC Minerals said Oct. 4 that it has closed a US$23 million comprehensive refinancing package with Auramet International LLC, comprising a US$16.5 million senior secured gold loan and US$6.5 million in working capital facilities.
The US$16.5 million senior secured gold loan will be repaid through the delivery of 16,800 gold ounces over a 30-month period starting Feb. 28. 2017. RNC also granted call options to Auramet on 1,000 gold ounces per month, with a strike price of A$1,900 per ounce and expiration dates from February 28, 2017, through September 30, 2018. The loan is also repayable at any time without penalty.
Meanwhile, the working capital facilities — a US$5.5 million in-process gold facility and a US$1.0 million in-process nickel facility — will bear an interest rate of LIBOR plus 4.5% per annum and will form part of deals for Auramet to purchase all gold and nickel produced from RNC's Beta Hunt nickel mine in Western Australia during the term of the gold loan.
As part of the refinancing package, the parties have implemented a forward sale gold price protection program covering 1,300 ounces per month of Beta-Hunt gold production at an average price of A$1,728 over a 15-month period starting February 2017. The gold output covered by the protection scheme represents about a quarter of the mine's monthly output during the program period.
Furthermore, RNC secured the gold loan against its shares in Salt Lake Mining Pty. Ltd., which owns Beta Hunt, and in VMS Ventures Inc., which holds a 30% stake in the Reed Lake copper mine in Manitoba.
RNC plans to use the proceeds from the refinancing package to repay the obligations under its senior metal prepay agreement with Lascaux Resource Capital Fund I LP's LRC-SLM LP unit, which will eliminate a related 3% gold royalty and other covenants. The funds will also give the company financial flexibility for the ongoing ramp up and development of the Beta Hunt mine.