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The company obtained $25 million in a senior secured revolving credit facility and $40 million in a senior secured term credit facility with HSBC Bank Canada and Macquarie Bank.
The initial drawdown under this syndicated facility will be used to repay Mandalay's existing $40 million revolving credit facility with HSBC, which was scheduled to mature in July. Funds will also be used to fund the repurchase or redemption of the outstanding senior exchangeable gold bonds issued by Gold Exchangeable.
"We are extremely pleased to have accomplished a key strategic initiative of the company and restructured our debt with both HSBC and Macquarie. Both lenders have been incredibly supportive in the process; underscoring the confidence in both of our producing assets and will undoubtedly contribute to the long-term success of the company," said president and CEO Dominic Duffy.
The credit facilities have a three-year term and will be reduced by $3 million each quarter commencing September, until December 2020, and thereafter repaid in eight equal quarterly instalments of $3.78 million starting in March 2021. The final payment of about $28.78 million is due to be made on the maturity date in March 2023.
Mandalay entered into two separate hedging programmes with HSBC and Macquarie related to the syndicated facility, for 150,000 ounces over the three-year term.
The hedges consist of a zero-cost collar hedge for 75,000oz of saleable gold with a floor price of $1,550/oz and a ceiling of $1,617/oz and an Australian dollar gold forward contract for the remaining 75,000oz at AU$2,390/oz.
Mandalay has also entered into a bond purchase agreement under which Mandalay will purchase gold bonds for cancellation. Following the completion of this transaction, Mandalay intends to exercise its rights to cause Gold Exchangeable to redeem all of the remaining gold bonds.
Mandalay produced 76,500 of gold-equivalent in 2019 from its Björkdal mine in Sweden and Costerfield in Australia, and has guided 2020 production of 95,000-109,000oz.
Shares in Mandalay Resources were trading at C56c, valuing the company at $51 million.
