Montage Gold (TSXV: MAU) has secured a massive financing package that will enable the company to proceed with the development of its Kone gold project in Cote d’Ivoire.
The package, valued at US$825 million, is to be funded in combination by Wheaton Precious Metals (TSX: WPM) and Montage’s strategic shareholder Zijin Mining. The transaction is said to increase liquidity sources to US$968 million, including cash on hand.
The package will see Wheaton provide a US$625 million gold stream and a US$75 million loan facility. The gold stream is said to be limited to just the Kone and Gbongogo deposits, along with a 500-metre boundary and an expanded area of interest initially, which will decrease once certain thresholds are met. The limited area of application allows Montage to maintain exploration upside for future discoveries on the land package. The package from Wheaton contains a floor price of 20% above $2,100 per ounce gold, with a gold price sliding scale to be in effect for the first five years.
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In terms of specifics, the gold stream will see Wheaton take 19.5% of payable ounces until 400,000 ounces of gold are delivered, which then drops down to 10.8% of payable gold ounces until an additional 130,000 ounces are delivered. A 5.4% stream will then be applicable on the core area of interest for the life of the mine.
Zijin meanwhile is providing US$125 million in funding, which consists of a US$75 million fully redeemable subordinate gold stream and a US$50 million loan facility with a nine year term, and an interest rte of SOFR plus 4%. The stream will see Zijin receive 3.1% of gold production until 54,000 ounces of gold are delivered, after which the stream will reduce to 1.3% of production for the remaining life of the mine.
With the financing package in place, the company is said to be “soon” beginning construction of the Kone project.
Montage’s wholly owned Kone gold project is said to have an after-tax net present value of $1.09 billion based on US$1,850 gold, using a 5% discount rate. The mine is anticipated to produce 223,000 ounces of gold per year on average across a 16 year mine life at all in sustaining costs of $998 per ounce. Initial CapEx for the project is estimated at $712 million, with sustaining capital estimated at $165 million.
Montage Gold last traded at $2.22 on the TSX Venture.
Information for this briefing was found via Sedar and the companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
