4th Nov 2009 07:00
4 November 2009
Mwana Africa PLC
Freda Rebecca Gold Mine - Project Finance Update
Mwana Africa PLC ("Mwana" or the "Company") is pleased to announce that the Industrial Development Corporation of South Africa (the "IDC") has approved the provision of up to US$10 million debt funding for the Freda Rebecca gold mine in Zimbabwe.
Provision of the loan facility is expected to enable Mwana to accelerate the implementation of the mine's refurbishment programme, which is planned to increase production to in excess of 50,000 ounces of gold per year on the completion of Phase II.
Funding will be made available in two tranches. The first tranche, up to $4 million, will be applied to fund the remaining working capital requirements of Phase I. The remainder of the funding will be applied to the capital expenditure and working capital requirements of Phase II.
The loan is repayable in 10 equal instalments over a five year period and attracts interest at US$LIBOR plus 5%.
The funding is subject to loan documentation and fulfilment of certain customary conditions precedent including, but not limited to: the provision by the Export Credit Insurance Corporation of South Africa ("ECIC") of political risk insurance and the provision of a detailed environmental management plan for the mining operations. The availability of the second tranche of funding is conditional on independent verification of JORC/SAMREC compliant measured gold resources, sufficient to support a ten year life of mine. Mwana Africa PLC will provide a parent company guarantee covering the first tranche of funding until such time as the above conditions precedent are fulfilled.
Freda Rebecca has produced 1,081 ounces of gold since 13th October 2009.
Kalaa Mpinga, Chief Executive Officer of Mwana Africa PLC said:
"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. 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."
This press release is available for download from the Company's website; www.mwanaafrica.com.
Enquiries:
Oliver Baring, Executive Chairman Tel: 020 7654 5580
Donald McAlister, Finance Director
Mwana Africa PLC
Tanya Chikanza / Jonathan Martin Smith Tel: 020 7239 0140
Smith's Corporate Advisory
Tom Randell / Anca Spiridon Tel: 020 7653 6620
Merlin
Ryan Gaffney / Mike Jones Tel: 020 7050 6500
Canaccord Adams Limited
Notes for editors
About the Industrial Development Corporation
The IDC is a self-financing, South African state-owned national development finance institution that provides finance to promote industrial and entrepreneurial development. Its primary objectives are to contribute to balanced sustainable economic growth in Africa and to the economic empowerment of the South African population, thereby promoting the economic prosperity of all citizens of the African continent.
Freda Rebecca
The Freda Rebecca gold mine is located near Bindura, approximately 90 kilometres north-east of Harare.
Exploration, development and production history in the area dates from 1912. The mine and plant complex were developed by Cluff Gold and the first gold pour took place in 1988. In 1996, the mine was acquired by Ashanti Goldfields Zimbabwe which was itself acquired by AngloGold in 2004.
In 2005 Mwana acquired Freda Rebecca from AngloGold. Mwana has committed to sell a 15% stake to a local investor. Freda Rebecca achieved production of 98,000 ounces of gold in 2002, however as a result of the social and economic difficulties in Zimbabwe, output from the mine declined sharply and the mine was placed onto care and maintenance in 2007.
Following the announcement in February 2009 of revised export procedures for gold produced in Zimbabwe, together with the termination of the requirement to submit a proportion of foreign currency earnings to the RBZ for conversion to Zimbabwe dollars, Mwana Africa announced in March 2009 its intention to restart gold production at the Freda Rebecca mine.
A revised mine plan is being developed, based on the optimisation of the resource model at prevailing prices. Mwana Africa believes that potential for expansion of the operation exists through further exploratory and confirmatory drilling at and in the vicinity of the existing mines.
References to dollars or $ refer to US dollars unless otherwise stated.
This press release includes 'forward-looking statements'. Words such as 'anticipates', 'expects', 'intends', 'plans', 'forecasts', 'projects', 'budgets', 'believes', 'seeks', 'estimates', 'could', 'might', 'should' and similar expressions identify forward-looking statements. All statements other than statements of historical facts included in this press release, including, without limitation, those regarding Mwana Africa's business strategy and plans and objectives of management for future operations and acquisition opportunities, are forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors which could cause the actual results, performance or achievements of Mwana Africa or the markets and economies in which Mwana Africa operates to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements, including, without limitation, political, regulatory and economic factors. Factors that would cause actual results or events to differ from current expectations include, among other things, political risks in the DRC and Zimbabwe, changes to regulations affecting Mwana Africa's activities, and the other risks involved in the mineral exploration industry. Mwana Africa believes that the assumptions inherent in the forward-looking statements are reasonable; however, forward looking statements are not guarantees of future performance and accordingly undue reliance should not be put on such statements due to the inherent uncertainty therein. Mwana Africa does not assume any responsibility to update any of such forward-looking statements, save as required by relevant law or regulatory authority.
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