PROJECT FINANCE

West African gets big slab of debt financing for Kiaka

QUALITY gold mine developer and producer West African Mines has awarded a US$265 million debt mandate to mining-sector financiers Sprott and Coris Bank for the Kiaka project build, set to become the ASX-listed company’s second 200,000 ounce per annum operation in Burkina Faso by mid-decade.

Michael Quinn

After the successful debt financing of Sanbrado, WAF has gone down the same route for Kiaka, mine number two in Burkina Faso

No hedging is required while the interest rate averages "5.3% per annum over the reference rate".

The debt also involves a production payment agreement of US$12.44/oz for the first 1.5 million ounces produced.

WAF's funding for its first operation, Sanbrado, included a $200 million facility provided by Taurus.

Kiaka's feasibility study costed first production at $430 million.

WAF had nearly A$200 million in cash and bullion at the end of March.

While WAF has been performing well on the ground, the company's shares have drifted lower all year.

Brokerage Argonaut said the equities market had shown "no love or logic" over this period given the operational performance.

"We think the sell-off will reverse as WAF delivers more Sanbrado cashflows and gets well into Kiaka's construction with a syndicated debt facility in hand," Argonaut said earlier this week.

Shares in WAF were up 2.5% to 85.5c in morning trade, capitalising the company at $875 million.