Besra’s US$300m funding agreement for its 3Moz Bau gold project with major shareholder Quantum Metal Recovery is very much live with the initial US$2m payment received and held in trust.
This initial funding is currently being held in trust pending satisfaction of conditions set out in the non-binding terms sheet, which fully funds bringing the Bau project in Sarawak, Malaysia, into production.
Besra Gold (ASX:BEZ) is entitled to a further US$3m initial payment upon execution of the facility agreement, which is expected in late April 2023.
Quantum will then be required to pay Besra up to US$10m per month up to a limit of US$300m for further exploration, feasibility studies, mine development purposes and working capital with updating the 2013 Bau Feasibility Study being one of the company’s top priorities.
Debt free funding
The US$300m facility is being made available to Besra as an effective 5% deposit of the Reference Price – the five-day average of the London Metal Market gold price with a floor price of 115% of the all-in-sustaining cost at the time of delivery – on future gold production up to 3Moz.
Once production begins, Besra will receive the remaining 85% of the Reference Price – including a 10% discount and less the pre-paid deposit – for each ounce of gold covered by the facility delivered to Quantum
Deliveries to Quantum are to be made from all gold produced up to 25,000 ounces of gold and thereafter 65% of gold produced, leaving 35% of production unassigned.
Attractive gold producer
Under the 2013 Feasibility Study, Bau was envisaged as a base case +110,000oz gold open-pit mine with a four year life of mine based on a 1.1Moz Measured and Indicated resource and a 12-18 month construction period.
The updated study will refresh cost estimates for a +100,000oz project, which will benefit from drilling in 2021-22 that confirmed standalone development potential including higher grades at the Jugan ore body.
This update will also incorporate updated Resource estimations as well as onsite pilot processing plant metallurgical studies.
Besra has already defined total resources of Measured 3.4 Mt @ 1.5g/t Au for 166.9koz, Indicated 16.4 Mt @ 1.57g/t Au for 824.8 koz and Inferred 47.9 Mt @ 1.29 g/t Au for 1,989 koz, across a number of discrete deposits within the Bau corridor. .
This article was developed in collaboration with Besra Gold (ASX:BEZ), a Stockhead advertiser at the time of publishing.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.