Greatland Gold secures funding for its share of Havieron

Greatland Gold announced the execution of debt and equity agreements on Monday, to secure up to AUD 340m (£200m) in new funding that is expected to enable it to fully fund its 30% share of Havieron into production.

The AIM-traded firm said a commitment letter, including a terms sheet, was signed for an AUD 220m seven-year term self-arranged debt syndicate with three banks - ANZ, HSBC and ING Bank Australia.

A strategic equity investment, meanwhile, was made by Wyloo Metals - a privately-owned metals company with a focus on investing in mine development.

Grearland said Wyloo’s initial strategic equity subscription totalled AUD 60m, subject to shareholder approval, with additional future potential equity contribution of AUD 60m providing a total of AUD 120m.

The initial equity subscription was priced at 8.2p per share, being the same price at which equity was raised in the recent placing on 24 August, and a “small premium” to the five-day volume-weighted average share price to 9 September.

It would result in Wyloo becoming Greatland's largest shareholder, with around 8.6% of shares on issue.

Wyloo's further potential investment would be through the issue of warrants to subscribe for additional equity as ordinary shares at an exercise price of 10p per share which, if exercised in full, would realise further gross proceeds of £35m.

If the Wyloo warrants were exercised in full, the average price of Wyloo's investment in Greatland would be just over 9p per share, being a 10.6% premium to the five-day volume-weighted average price to 9 September.

The company said the Wyloo placement and warrants were subject to shareholder approval, adding that an extraordinary general meeting was expected to be convened in October as the directors unanimously recommended that shareholders vote in favour of the approval resolution.

Completion of the debt facilities and Wyloo placement would enable Greatland to be fully funded for its 30% share of the Havieron project development, based on the October pre-feasibility study.

The board added that securing the debt facility commitment letter with tier-1 banking institutions before the finalisation of the feasibility study reflected the “highly bankable” nature of the project and the quality of the Havieron asset.

It described a “highly competitive” term debt interest rate at 3.50% per annum margin plus BBSY benchmark, reducing to a margin of 3.25% per annum post-project completion, with early repayment flexibility.

“This is a tremendous announcement for Greatland to have a pathway to being fully funded for its share of the development costs of Havieron,” said managing director Shaun Day.

“This outcome has been achieved through a combination of equity market support, including today's execution of strategic investment agreements with Wyloo and with the support from a syndicate of high-quality banks providing a commitment letter in respect of AUD 220m of debt funding.

“The significant size of each bank's commitment together with the strategic support from Wyloo highlights the long-term confidence in the Havieron gold-copper project and the strength of this world class asset.”

Day said the selection of ANZ, HSBC and ING as Greatland’s banking partners reflected their quality as financial institutions, commitment to supporting high-quality asset development and their “strong relationship commitment” throughout the banking process.

“Following shareholder approval, we look forward to welcoming Wyloo as our strategic partner and largest shareholder to complete the Havieron funding package.

“Completing the debt facilities and Wyloo investment will enable Greatland to be fully funded for its share of costs in developing the Havieron project into first production and potential free cash flow which will provide long-term financial stability and create significant value for Greatland and its shareholders.”

At 1150 BST, shares in Greatland Gold were up 11.9% at 9.29p.

Reporting by Josh White at Sharecast.com.