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ABM Resources Secures Standby Funding Facility From ANZ Bank

ABM Resources' (ASX:ABU) staged and low capital cost approach for development of Old Pirate High-Grade Gold Project has been given a vote of confidence, gaining a stand-by funding facility from the Australia and New Zealand Banking Group.

ABM does not actually require conventional large project financing for Old Pirate in the Northern Territory of Australia, given its strong cash position of $8.3 million at June quarter end.

The trial mining and processing is fully funded from cash on hand. That said a commitment letter for the facility was signed as a back-up given the vagaries of current market conditions.

Key facility attributes:

- Two Tranche Senior-Ranking Facility:
- Tranche 1: $5M facility. Whilst available upon finalisation of all documentation and receipt of all relevant approvals and authorisations.
- This facility is to be supported by a minimum cash balance held by the company until successful completion of the Stage One trial mining and processing.
- Tranche 2: Up to $10M available upon granting of the Mineral Lease and decision to proceed with Stage Two mining to refinance Tranche 1 and provide funding for Stage Two.
- Final maturity date of March 2015.
- A Performance Bond Facility:
- $3M facility to replace ABM's current and future environmental bonding requirements.
- Returns existing bonds back to the Company's available cash.

Darren Holden, managing director of ABM Resources said, "ABM is very pleased that such a major and well respected banking group, with a strong technical team and excellent history in resource banking has agreed to offer ABM this back-up facility.

"ABM remains in a strong cash position and the trial mining and processing is fully funded from our current cash on hand.

"However, given the recent volatility in gold prices and uncertainty in market conditions the company considers it part of a risk management strategy to put a facility in place to account for any future changes in conditions."

With the sharp down-turn in gold prices in April 2013, ABM re-adjusted all of its long-term budget workings to a base case assumption of AUD$1200 per ounce gold price.

Upon completion of the Stage One trial mining and processing the Company will move to purchase several items which are rented in Stage One including the accommodation village, fuel tanks and power generation plants as well as possibly purchasing its own mining fleet (as opposed to contract mining).

ABM said the ANZ facility could also be used to rapidly increase the processing capacity at Old Pirate.

On completion of the Stage One trial mining and processing (for which the Company is already fully funded) the company will determine the optimal mining and processing rate at Old Pirate and whether drawdown of the facility is required.

Trial mining

ABM is targeting around 3,000 ounces of gold during the trial mining period, which at a gold price of about $1,200 per ounce would deliver some $3.6 million in gross revenues.

Equipment has been ordered and planning is now complete for the 10,000 tonne trial mining phase.

Following the start of trial mining in July 2013, processing of the gold is expected to begin in August.

Old Pirate gold inventory

The Old Pirate Gold Deposit has a total uncut mineral resource estimate of 1.88 million tonnes averaging a healthy 11.96g/t gold for 723,800 ounces.

Significantly, metallurgical test work indicates that up to 97% of gold can be recovered from low cost / low capital expenditure gravity processing methods.

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