Havilah Resources Ltd (ASX:HAV) has accepted a $6 million 12-month standby funding facility from Investec Group that backs its divestment of the North Portia Copper-Gold Project in northeast South Australia.
Final documentation for the Investec Group facility is expected to be completed by early November 2018.
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Havilah reported the facility provided a contingency funding plan for the company as it divested the North Portia project to Broken Hill-based Consolidated Mining & Civil Pty Ltd (CMC).
A key part of the deal was the sale of the Benagerie Mining Lease to CMC in July, with the lease area near Broken Hill including North Portia and the adjacent operating Portia Gold Project.
Havilah is set to receive $7 million over the next 12 months as North Portia permitting is completed and approved under the company’s North Portia divestment agreement.
The company said: “The timing of the receipt of these divestment proceeds is subject to various permitting approvals which are not under Havilah’s full control.
“This facility provides Havilah with a contingency funding plan over the next 12-month period as the permitting work is completed and submitted to the regulator for approval.”
Havilah chief executive officer Walter Richards said: “We are pleased to have this facility in place as a contingency measure to manage our cash flow over the next 12 months, as work is completed on the North Portia permitting.
“This facility provides us with financial flexibility to ensure we can continue to progress the execution of our Copper Strategy – Enhanced by Cobalt.
“Investec has been very supportive since the start of our relationship in 2015 and we appreciate their continued backing.”
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Investec’s 12-month facility starts from the execution of the facility documents, likely next month.
Havilah and its subsidiaries, Kalkaroo Copper Pty Ltd and Mutooroo Metals Pty Ltd, will guarantee the facility.
The financier’s interest will be set at the floating Bank Bill Swap Bid Rate (BBSY) and include a credit margin on top.
Investec may be issued up to 10 million three-year unlisted options, depending on Havilah’s use of the facility.
Investec’s exercise price for the options will be set at a 20% premium to the 30-day volume-weighted average share price when the facility is taken up, triggering the issue of options.
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As part of the new funding deal, the parties have agreed to cancel a Portia contingent success fee, which was to have applied if production from Portia exceeded 50,500 ounces of gold in total with a cap of 80,000 ounces.
This was a feature of a 2015 $6 million loan and risk management facility.
The facility allowed Havilah to construct the Portia processing plant, with the company only drawing down $4 million of the funds.
Havilah repaid the facility in 2016, ahead of its maturity date.