Avanti Mining (TSX:V.AVT, Stock Forum) moved to advance development of the Kitsault molybdenum mine, located on Alice Arm in the Skeena Mining Division of British Columbia, with the company's announcement today that it had entered into a debt financing mandate letter with a syndicate of six lenders for a proposed secured debt finance facility worth US$612.0 million.
According to the news release, the mandate letter and corresponding term sheet established the terms of the deal where the syndicate would lend the project finance facility. Final credit approval is expected in September 2014.
The transaction consists of US$500.0 million senior debt for a term of 10.5 years, US$42.0 million in equipment finance for a term of five years and US$70.0 million in the form of standby cost over-run facilities for a term of eight years.
Interest rates on the facility will be LIBOR-based with loan payments due semi-annually or quarterly.
Funding is subject to customary conditions including an equity financing component arranged by the company, which it is in on-going pursuit through multiple options, including the sale of a silver stream and/or investment by a strategic partner.
Company president and CEO, Gordon J. Bogden, commented on the proposed deal, “The project finance facility is a major component of Avanti's financing strategy. We welcome the financial support of our banking partners and we can now focus on advancing equity funding options to complete our CDN$818 million initial construction capital requirement for Kitsault.”
He went on to conclude, “With the execution of offtake agreements with ThyssenKrupp Metallurgical Products GMBH and SeAH M&S, the conclusion of a Benefits Agreement with the Nisga'a Nation, the receipt of construction and environmental approvals for the Kitsault Project, commencement of construction activities at site and now the pending agreement on the cornerstone project financing component, the Kitsault project moves significantly closer to a positive production decision.”
Avanti was in the news recently when the company announced the appointment of a Vice President, Corporate Development and Investor Relations in the middle of July.
Currently there are 468.2m outstanding shares with a market cap of $37.5 million.
FULL DISCLOSURE: Avanti Mining is a Stockhouse Publishing client.