Blackham Resources Ltd (ASX:BLK) has refinanced its term loan with Orion Fund JV Limited through a new $14.3 million arrangement with key mining contractor MACA Limited (ASX:MLD).
As part of a standstill agreement, the 31 December 2017 maturity repayment date of the non-amortising term loan was deferred to 15 January 2018.
This enabled Blackham to negotiate a secured loan facility with MACA and the maturity repayment date has been met.
No repayment obligations until March 2019
There are no principal repayment obligations under the MACA Loan until March 2019 and the initial interest rate is 10% per annum.
Blackham has the Matilda-Wiluna Gold Operation in Western Australia.
The refinancing and term loan repayment form part of the company’s recapitalisation strategy.
Aim to repay project financing facility in 2018
Blackham has a separate fully drawn project financing facility of $23 million that remains in place with Orion.
This will reduce to $20.5 million following completion of Blackham’s proposed $35.9 million entitlements issue.
The company intends to fully repay this facility in 2018.
Entitlements issue aims to raise $35.9 million
Blackham expects to launch the entitlements issue next week after completing a prospectus and arranging underwriting.
It will be on the basis of five new shares for every two shares held at an issue price of $0.04 per new share together with one free attaching listed option for every two new shares issued.
The company has appointed Hartleys Limited as lead manager and to act as underwriter with an agreement expected to be signed this week.
Tectonic Advisory Partners, acting through Ecoban Securities Corporation, will act as North American placement agent.
MACA, Orion and Pybar Mining Services have provided sub-underwriting commitments in respect of the proposed issue of up to $8 million, $2.5 million and $2.5 million respectively.
Additionally, chairman Milan Jerkovic has committed to sub-underwrite up to $500,000 of the entitlements issue.
READ: Blackham Resources accesses high grade ore at gold operation
Milan Jerkovic said: “Refinancing of the Orion term loan, together with the alignment of key stakeholders, marks a milestone which allows the company to move forward with the final stage of our recapitalisation strategy.
“This will ensure that Blackham is well funded with a strong balance sheet to enable it to focus initially on a simple free milling mine plan at its Matilda-Wiluna Gold Operation.
“It comes as the operation transitions to a period of stable gold production, having recently accessed high grade ore zones, delivered record gold production and achieved a step-change in project economics.
“The company plans to repay the remainder of its Orion facilities and normalise working capital using internally generated cash flows by the end of 2018.
“We are targeting a net-cash position by the end of the calendar year, whilst continuing exploration aimed at lengthening and improving the free-milling mine plan.”
Company appoints finance specialist as director
Finance specialist Greg Fitzgerald has agreed to join the Board following the entitlements issue.
He is a chartered accountant with more than 30 years of gold mining and resources related experience.
Fitzgerald has extensive executive experience in managing finance and administrative matters for listed companies, including Resolute Mining Limited (ASX:RSG).
Technical advisory committee is formed
Linton Kirk and Jonathan Lea will also join a new technical advisory committee and will work with the executive team to further de-risk and optimise the operations as well as growth opportunities.
Kirk has more than 35 years’ experience in mining, covering open pit and underground operations in several commodities.
Lea is a geologist of more than 30 years’ standing who has spent more than 20 years of his career in gold mining.