Reed Resources (ASX: RDR, OTC: RDRUY) has appointed Credit Suisse to act as arranger to provide $19 million in debt finance for the wholly owned Meekatharra Gold Project located in the prolific Murchison region of Western Australia.
The funds are to be used for working capital requirements, with Reed receiving a credit approved term sheet which is subject to detailed documentation.
Luke Tonkin, managing director for Reed, commented on the facility: "The Credit Suisse facility, which replaces the previously announced $23M facility offer by another lender, provides the company with a flexible funding and hedging package which will not only provide funding for the development of Stage 1 of the Meekatharra project but will also allow the company to commence preliminary work on Stage 2 of the project in a shorter timeframe."
Highlighting the potential of the Meekatharra Gold Project, it currently hosts a Resource of 3.6 million gold ounces and a Reserve of 752,000 gold ounces, with the current forward plan to commence mining in October 2012 with commissioning in December 2012.
Another plus for the project is the strong potential for gold ounce growth, considering there has been limited exploration on majority of Reed's 1000 square kilometre tenement area.
Key features of the facility
- $19 million Senior Secured Term Loan Facility;
- Tenor of twelve months from first utilisation, with an option to extend a further six months;
- A hedging facility which includes 70,000 ounces in forward delivery contracts and 40,000 ounces in bought puts; and
- Mining approval for the Batavia open pit is a condition precedent to utilisation (mining approval for the Bluebird and Surprise Stage 1 pits have been received, with the required approvals for the Batavia pit expected in the coming weeks).
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