Asanko Gold Inc. (TSX:AKG)(NYSE MKT:AKG) announced on Thursday May 19 that it has agreed terms with RK Mine Finance (“Red Kite”) to amend its existing US$150 million loan facility and defer repayment of the principal for two years to enable the Company to re-invest in its growth projects and increase production at its flagship project, the Asanko Gold Mine in Ghana, West Africa.
Phase 1 of the Asanko Gold Mine is in production and expected to produce an annual average of 190,000 ounces of gold per year over a 12.5 year life-of-mine.
On May 2, 2016 the Company elaborated on the scope of a Definitive Feasibility Study, which is currently being undertaken to examine the expansion of the Asanko Gold Mine in two further stages.
The first stage, Phase 2A, envisions capital expenditures of US$100-$125 million to expand production to approximately 280,000 ounces of gold per year by Q4 2018.
The Company’s ability to fully fund this expansion from cash flow from operations is now significantly enhanced by this US$70 million deferral of principal repayments on its US$150 million debt facility, Asanko said.
Peter Breese, President and CEO, said: “Prudent financial discipline and deployment of capital has always been an integral component of our strategy. The deferral of the principal repayments on the Red Kite debt by two years will enable us to further strengthen our balance sheet ahead of an investment decision on Phase 2A in Q4 2016.”
“Red Kite have been very supportive of our growth strategy and recognize that Phase 2A offers value accretive growth by increasing production by approximately 47% to 280,000 ounces per annum in 2018 while lowering unit costs and improving profit margins.”
With the loan amendment, the first principal repayment will now be payable on July 1, 2018 after which the facility will be amortised over nine equal quarterly instalments, with the last payment on July 1, 2020.
The Company said it will continue to pay quarterly interest on the loan facility during the principal deferral period with the first interest payment on July 1, 2016. There are no other changes to either the existing debt facility terms or the offtake agreement. A deferral fee of 2% of the loan principal is payable by June 30, 2016.
Asanko said an amendment to the existing Senior Facilities Agreement is expected to be completed in the coming weeks and will be filed on SEDAR as a material Company document.
About RK Mine Finance
RK Mine Finance provides mining companies with project financing and metal off-take agreements for initiation or expansion of mine production and is part of the Red Kite group. Red Kite operates across the global metals industry from offices in Bermuda, Hong Kong, London, New York, Shanghai and Toronto. Investors in Red Kite funds include college endowments, foundations, family offices, pensions and other institutional investors.
About Asanko Gold Inc.
Asanko’s vision is to become a mid-tier gold mining company that maximises value for all its stakeholders. The Company’s flagship project is the multi-million ounce Asanko Gold Mine located in Ghana, West Africa. The mine is being developed in phases. Phase 1 was built within budget and ahead of schedule, with gold production commencing in January 2016 and commercial production declared on April 1, 2016. Ramp-up to steady-state production of 190,000 ounces per annum is expected in Q2 2016.
Asanko is managed by highly skilled and successful technical, operational and financial professionals. The Company is strongly committed to the highest standards for environmental management, social responsibility, and health and safety for its employees and neighbouring communities.