Oxus Gold secures US$185 million financing from Chinese consortium
Oxus Gold (AIM: OXS) has entered into conditional agreements with a
consortium of Chinese investors to invest and arrange financing of a
total aggregate amount of US$185 million to help develop the company's
gold project in Uzbekistan and increase production to 0.3 Moz (million
ounces) of gold annually after 2011.
Under the terms of the
financing, members of the concert party will make an investment in Oxus
of US$85 million through an issue of new ordinary shares and
convertible loan notes and will be granted warrants to subscribe for
new shares in the company for US$20 million in return for an
undertaking to arrange a further minimum of US$80 million in project
finance.
The planned programme on the company’s 50% owned
Amantaytau Goldfields joint venture (JV) in Uzbekistan will include the
expansion of its existing open pit heap leach mining operations, the
development of one of more underground mines and accelerated
exploration. The Uzbek government controls the remaining 50 percent.
The
proceeds are expected to allow AGF to target first production at the
project for the middle of 2011 and an increase in annual production to
0.3 Moz.
The concert party consists of Baiyin Non-Ferrous Group
Co Ltd, CITIC Construction Co Ltd and Chang Xin Yuan Su Equity
Investment Fund Management LP. Baiyin and CITIC are ultimately owned
and controlled by the government of the People's Republic of China.
Chang Xin is a private equity fund registered in the People's Republic
of China and managed by Long March Investment Consulting.
The
members of the party will subscribe to 573 million shares in Oxus at 6
pence each, which will represent a 59.7% shareholding in the company.
“Oxus
will also be able to draw on the concert party's extensive technical
expertise and we very much look forward to working with them. All
parties will now focus on obtaining the relevant governmental
agreements and approvals as soon as possible, and we continue to target
2011 for first gold production from the underground mine at AGF,” said
Oxus chairman Richard Shead.
Oxus has also obtained agreement
from its convertible loan note holders to amend the terms of the
existing US$18.5 million 8% unsecured loan notes, due May 2010 and
convertible at 37 pence per share, to include an extension to the final
repayment date to May 2013, a new interest rate of 3% above six month
LIBOR (London Interbank Offered Rate), and new conversion terms which
allow the existing convertible loan notes to be converted at 12p per
share into 96.35 million new shares.
Oxus Gold has an unofficial
in-house estimate of 24 million ounces of gold and almost 500 million
ounces of silver for the total Amantaytau resource.
The mine
plan for the project envisages gold production of 100,000 ounces per
annum over 12 years. Total cash costs are expected to be approximately
US$377 per ounce of gold produced, including royalties and operating
taxes. Ungeared NPV for the project is US$103.7 million at a 7%
discount rate per annum, the IRR is 34.8% and the payback is 30 months
from the start of production. The ore will be processed using
bio-oxidation technology provided by GoldFields.
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