European Bank to underwrite Centerra’s $150-million Öksüt project financing term loan

VANCOUVER (miningweekly.com) – Gold miner Centerra Gold has gained a second underwriter in the form of the European Bank for Reconstruction and Development (EBRD) for its $150-million project financing term loan that it will use to develop the Öksüt project, in Turkey.

Toronto-based Centerra advised on Friday that the EBRD would enter the facility investing $75-million, representing the bank’s first mining investment in Turkey.

“Centerra has a long-standing relationship with EBRD dating back to the company's initial public offering, with EBRD providing support and financing for the company. We value our ongoing relationship with EBRD and are grateful for their commitment and support to help finance development in the regions where we both operate,” advised Centerra CEO Scott Perry.

The facility was initially fully underwritten and signed by UniCredit on April 5.

Centerra reported that it had recently obtained its ‘forestry usage permit’, comprising one part of the overall land-use permit. Assessment of the other part of the land-use permit, the ‘pastureland permit’, is currently in progress. The company expected issuance of the permit “shortly”.

According to Centerra, it expects to meet all conditions on the financing facility by the end of September.

The company’s Turkish subsidiary Öksüt Madencilik Sanayi ve Ticaret will use the facility to finance a substantial portion of the construction, development and operation of the Öksüt gold mine and its related infrastructure.

Secured by the Öksüt assets and being nonrecourse to Centerra, the facility has a 5.75-year term. The interest rate has been fixed at the London interbank offered rate plus 2.65% to 2.95%, depending on project completion status, with no obligatory gold hedging requirements.

Advances under the facility were subject to customary conditions precedent, including receiving applicable project permits and approvals, the company advised.

The project has a base case net present value, at an 8% discount rate, of about $242-million and an internal rate of return of 42.5%. Preproduction and construction capital are expected to be a modest $221-million, which includes a $25-million contingency.

The project is expected to process 26.1-million tonnes of ore at an average grade of 1.4 g/t gold over eight years producing 895 000 oz of gold at an average all-in-sustaining cost of $490/oz sold.