Geopacific Resources Ltd (ASX:GPR) has successfully negotiated its financing package with Sprott Private Resource Lending II (Co), Inc, further de-risking its flagship Woodlark Gold Project in Papua New Guinea following the deferment of all non-essential activities at the site until 2022.
Existing work packages key to the delivery of the project continue to advance, however, including the construction of the permanent camp, exploration drilling, community relocation, engineering and the process plant ground preparation.
READ: Geopacific Resources continues to de-risk Woodlark Gold Project while progressing exploration
The completion of these activities will further reduce the impact on the project delivery and minimise any delays. Geopacific is well-positioned to fund these activities with A$77.2 million of unrestricted net cash reserves.
“Strong financial position”
“While the delay in the project is exceptionally disappointing, Geopacific is committed to developing the Woodlark Gold Project,” Geopacific Resources CEO Tim Richards said.
“The focus on the Island continues to be the delivery of the key infrastructure necessary to facilitate construction of the process plant. Restructuring the debt facilities allows Geopacific to preserve capital while the impacts of the delay are assessed.
“Geopacific remains in a strong financial position, with A$77.2 million unrestricted cash reserves and a supportive lender with a fully committed financing package.”
Key agreement highlights
Geopacific and Sprott have agreed to make amendments to the terms and conditions of the Facility and the Stream Agreement. The parties have entered into an interim agreement that outlines these proposed amendments, which are required to be incorporated into the full form agreements by December 6, 2021. The key highlights are:
The lender remains supportive as a funding partner with a fully committed financing package;
- The lender’s facilities under the agreements will remain in place on substantially the same terms and conditions, including substantially the same conditions precedent to the advance of funds provided the conditions precedent are satisfied to enable first drawdown by August 31, 2022;
- Prepayment of the principal (and accrued interest) under the Facility Agreement and repayment of the deposit advanced under the Stream Agreement is required to occur by December 6, 2021. The funds required to service these payments are currently available and held in the company’s Debt Proceeds Accounts. This prepayment will result in a substantial interest expense saving of over US$600,000 per month until the lending commitments are re-drawn;
- Significant reductions to the facility prepayment obligations and the stream termination payment have been negotiated with the lender, with the previously agreed approach only reinstated if the lending commitments are re-drawn. The voluntary prepayment premium that would otherwise apply is not payable on this prepayment;
- The cost savings as a result of restructuring of the agreements will be captured in the revised project budget;
- The company is required to provide a Cost to Complete Certificate to the lender by January 31, 2022. setting out whether the company is fully funded to reach project completion and positive cash flow. If this certificate or the lender (in consultation with its project consultant) identifies a funding shortfall, the company must prepare and deliver a plan to address such shortfall which is satisfactory to the lender by no later than February 28, 2022; and
- The company remains well funded with A$77.2 million of unrestricted net cash reserves.