Shanta Gold secures 30m-dollar loan facility with FDN bank

East Africa-focused gold mining company Shanta Gold has secured a 30m-dollar medium-term facility with FBN Bank.

Proceeds from the new facility will be partially used to cover the remaining monthly principal repayments of the company's outstanding loans with FBN which are worth $11.25m and YA Global Master SPV, worth $5.3m.

The proposed arrangement, together with the proceeds from the October 2012 placing, provides Shanta Gold with suitable headroom during the New Luika gold mine ramp-up phase and greater flexibility going forward.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up

Mike Houston, Chief Executive Officer of Shanta Gold, commented: "It was important, as relayed to shareholders, to put in place a suitable financial structure that would provide the necessary headroom during the early stages in the production growth curve and we are pleased to extend our banking relationship with FBN who have shown a strong commitment to the New Luika project.

"As we approach the end of Shanta Gold's first production period, I am pleased to confirm we are on track to achieve our modest year-end gold production target of 6,000 ounces. The past few months have been a strong learning curve for the operational team and this will continue into the first quarter of 2013 as production is ramped up with the improved plant facility as a result of the additional crusher unit which is now on site."

The group said that the loan facility had been approved by its credit committee and that the legal documentation was being finalised with the expectation that the first draw down would take place in January 2013.

A further announcement is expected from the group relating to the terms of the loan once the terms are binding.

MF