Norseman Gold (LON:NGL, ASX:NGX) has struck a gold off-take agreement with EXP T1, part of metals-focused investment group Red Kite Group.
Under the terms of the deal, Norseman Gold's wholly owned subsidiary, Central Norseman Gold Corporation Limited, will supply Red Kite with its gold production up to a total of 300,000 ounces.
The off-take agreement includes market pricing and is based on Australian dollars, thereby removing any foreign currency exposure to the Norseman Gold project.
Norseman Gold also announced today it has secured a A$15 million working capital facility agreement with EXP T1.
Under the terms of the facility agreement, Red Kite will provide up to A$15 million of working capital to Central Norseman Gold Corporation Limited ('CNGC'), with interest payable at LIBOR plus 6%, maturing on 1 July 2013 or earlier, if repaid in full.
As part of this agreement Norseman Gold has paid a fee of 2% and issued 3,000,000 warrants to Red Kite.Each warrant is exercisable for one ordinary share of Norseman Gold at 30 pence per ordinary share for a period of two years.
EXP T1 is a subsidiary of RK Mine Finance Trust 1, a member of the Red Kite group of funds.
In April, dual-listed Norseman announced quarterly results showing it produced 11,781 ounces of gold in the three months to end-March 2011, up from 11,162 in the preceding quarter to end-December.
At the time the group said it was making progress in improving the underground workings at the Norseman mine in Western Australia.
Two weeks ago before those quarterly numbers, Norseman cut its production forecast for the current financial year to end-June 2011 because the underground workings were making slower progress than forecast.
Norseman had lowered its full-year gold production forecast to between 55,000 and 60,000 ounces from a previously flagged figure of 65,000 ounces. The reduced forecast was reiterated today.
Norseman operates Australia’s longest continuously running gold mining operation, which has produced over 5.5 million ounces of gold over a period of more than 65 years from the Norseman field in Western Australia.
In addition to the two producing high-grade underground gold mines, it has a portfolio of promising exploration targets that are being advanced to help support continued future production.