This loan facility is expected to enable Mwana to accelerate the implementation of the mine’s refurbishment programme which is expected to spur the gold mining company’s output to more than 50 000 ounces of gold per year.
This makes Mwana Africa one of the few companies to get loans for expansion of operations in the country.
“We are delighted that the IDC is supporting our project, and we are hopeful that this will be a catalyst for further investment into the country,” said Mwana Africa chief executive officer Kalaa Mpinga. “The IDC’s involvement in the project will allow us to accelerate the implementation of the second phase of our refurbishment programme, which is planned to increase production from the mine to approximately 50 000 ounces of gold per year.”
Freda Rebecca resumed operations last month and it is anticipated that the mine’s second phase of its expansion would be supported by an offshore loan after the parent company partly met the financial requirements of the first phase of refurbishment.
Funding will be made available in two tranches with the first one of up to US$4 million being applied to fund the remaining working capital requirements of phase I.
The remainder of the funding will be applied to the capital expenditure and working capital requirements of Phase II.
The loan is repayable in 10 equal instalments over a five year period and attracts interest at US$LIBOR plus 5%. LIBOR is interest rate at which banks can borrow funds, in marketable size, from other banks in the London interbank market. The LIBOR is the world’s most widely used benchmark for short-term interest rates
This is an almost done deal with the remaining item being the loan documentation and fulfilment of certain customary conditions including the provision by the Export Credit Insurance Corporation of South Africa of political risk insurance.
It is also dependent on the provision of a detailed environmental management plan for the mining operations.