AIM-listed mid-cap gold producer Archipelago Resources' subsidiaries have entered into a new corporate financing agreement with Standard Chartered Bank and PT Bank Permata TBK, an update issued by the company has disclosed.
Under the facility agreement, Archipelago said it could make initial draw-downs totalling up to $100m. Thereafter, and subject to obtaining necessary approvals, Archipelago said it could also exercise an option to draw-down a further $60m.
The group said that the funds would be utilised for refinancing existing indebtedness of $43.5m owed to Permata and Standard Bank, and general corporate purposes if Archipelago wished to make further draw-downs in the future.
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The group added that the funding supported Archipelago's balance sheet with reported cash and cash equivalents of $51m and gearing of 5.0% as of December 31st 2012, while also adding operational and strategic flexibility by providing a further source to finance growth initiatives. It said that financial close would be expected to occur over the coming month on completion of various conditions precedent.
In support of the facility agreement, Archipelago said that its subsidiaries would also enter into a five year exclusive off-take arrangement with Standard Chartered.
Colin Sutherland, Chief Financial Officer of Archipelago, commented: "In addition to on-going support from Permata, Archipelago looks forward to building a relationship with Standard Chartered. Both banks have a track record in financing growth companies in South East Asia and evidence a strong commitment to working with Archipelago."
He added: "Greater funding flexibility will support Archipelago's strong balance sheet and provides further foundation to pursue growth strategies."
Archipelago's share price was up 1.92% to 53p at 13:09 on Tuesday.
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