Lundin Gold secures US $450M from Orion Mine Finance and Blackstone

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By Ted Liu

Lundin Gold Inc. (TSX/OMG: LUG) has secured a project finance package of US $400 to $450 million with the Orion Mine Finance Group and Blackstone Tactical Opportunities, comprising of a gold prepay credit facility for $150 million, a stream loan credit facility of $150 million and committed participation of $100 to $150 million to future equity financings required to fund the project.

The financing provides the foundation for the development of Lundin Gold’s Fruta del Norte project and shows the growing support for mining investment in Ecuador.

“We are very pleased with the financial commitments that Orion and Blackstone have made towards the development of the Fruta del Norte project and Ecuador” said President and CEO Ron Hochstein. “It confirms the strength of this project and gives us the ability to move full speed ahead with construction.”

Gold Prepay Credit Agreement: Senior Secured Loan facility of $150 million entered into by Lundin Gold’s operating subsidiary, Aurelian Ecuador S.A., which holds the Fruta del Norte project. $75 million will be advanced at or shortly after closing. The remaining $75 million is available to be drawn at the option of Lundin Gold, up to the end of June 2018, subject to the perfection of all security and certain other conditions. Repayable in 19 fixed quarterly principal and interest instalments equivalent to the value of 11,500 oz of delivered gold starting in December 2020. Lundin Gold has an option to defer the quarterly instalments for up to four (4) quarters by increasing the gold equivalent deliveries by 1,000 oz for each deferred quarter.

Stream Credit Agreement: Senior Secured Loan facility of $150 million entered into by Aurelian Ecuador. $75 million will be advanced shortly after closing. The remaining $75 million is available to be drawn at the option of Lundin Gold up to the end of June 2018 subject to the perfection of all security and certain other conditions. Repayable in variable monthly principal and interest instalments equivalent to the delivery of 7.75% of gold production and 100% of the silver production starting in December 2020, up to a maximum of 350,000 oz of gold and six million oz of silver. Option for Lundin Gold to repay (i) 50% of the remaining stream loan on June 30, 2024 for $150 million and / or (ii) the other 50% of the remaining stream loan on June 30, 2026 for $225 million.

Orion and Blackstone have committed to participate in future equity financings of Lundin Gold, in an aggregate amount of not less than $100 million and not more than $150 million, as and when initiated by Lundin Gold and subject to minimum financing thresholds.

Orion and Blackstone have also been granted the right to purchase 50% of Fruta del Norte gold production, up to a maximum of 2.5 million oz., at a price determined based on monthly delivery dates and a defined quotational period.

Oskar Lewnowski, Chief Investment Officer of the Orion Mine Finance Group, commented, “As one of the largest investors dedicated to the mining industry, we are delighted to be a cornerstone participant of the project financing for the Fruta del Norte project. We look forward to working with the Lundin Gold management team on one of the most exciting development gold assets in the Americas.”

“Blackstone is excited to partner with Lundin Gold to develop Fruta del Norte, a world class gold deposit” said Jasvinder Khaira, Senior Managing Director at Blackstone Tactical Opportunities. “The Lundin Group are talented operators with a strong track record and our partnership is consistent with providing flexible and innovative capital to the natural resource sector.”

Endeavour Financial has provided debt financial advisory services and Norton Rose Fulbright Canada LLP has acted as legal counsel to Lundin Gold with the support of the law firm of Lexim Abogados in Ecuador.

Lundin Gold also announces the extension of the maturity date from May 31, 2017 to June 30, 2017, of the short-term credit facility with Zebra Holdings and Investments S.à.r.l., a company owned by a trust whose settlor was the late Adolf H. Lundin and an insider of Lundin Gold.

photo credit:Lundin Gold