The US$42m tranche loan from Mercuria will further solidify Wiluna’s plans to increase its gold production this year.

Wiluna Mining (ASX:WMX) is edging closer to executing  expansion plans and feasibility studies of its gold mining project in WA, after securing US$42 million tranche 2 loan funding from Mercuria.

Mercuria is one of the largest independent energy and commodity groups in the world, generating more than US$110 billion in turnover, with the loan a clear validation of Wiluna’s investment over the last 12 months and their future plans.

Wiluna says that Mercuria’s Credit Committee has approved the loan, with only legal documentation to be finalised. Drawdown will be immediately available after the documentation is completed.

The tranche 2 loan is structured as a 48-month tenor loan, with a 6-month grace period before monthly repayments commence. Interest cost will be LIBOR +9.5%.

Hedging facilities have also been secured, using the existing security arrangements of the Gold Prepaid Swap, which is already in place with Mercuria until July 2021.

Gold hedging is a condition of the drawdown, which Wiluna believes is an important aspect of risk management especially during significant levels of capital expenditure and high gold prices.

The hedging contracts will be for approximately 160,000oz, at a price which will be agreed at time of drawdown, and will be in place over the full 48-month tenor of the loan.

“We are delighted to have received final credit approval for this US$42 million facility from Mercuria as it provides full funding for our Stage 1 Expansion as well as allowing us to complete the Feasibility Study for Stage 2,” says Wiluna Mining executive chair, Milan Jerkovic.


On track for increased gold production

Wiluna’s project in WA is on track to produce 120,000 ounces of gold per year from the end of 2021.

Under the company’s three-year staged production plan, Wiluna Mining started producing gold ore last year at a rate of 60,000 ounces per year, and expected to reach full production of 250,000 ounces per year by the 2024 financial year.

The company has 1,600sqkm of exploration tenements in WA’s Yilgarn Craton, and its Wiluna gold operation is the 7th largest gold district under single ownership in Australia.

The project was bolstered by the discovery of high grade intersections with visible gold near existing mine workings in March.

“Stage 1 is on track for October 2021 commissioning, and the Stage 2 Feasibility Study will be completed by the end of calendar year 2021,” said Jerkovic.

“This includes drilling to expand the Wiluna Mineral Resources, which is expected to increase the ore reserve from 1.3Moz to 1.8Moz as part of the Study, and the Stage 2 mine plan,”  he added.

The company has already received investor commitments for $21.5m as part of an $80m funding package to develop the mine, with Jerkovic himself being one of the major shareholders.

Today’s US$42m tranche loan from Mercuria will further strengthen the company’s financial position.

This article was developed in collaboration with Wiluna Mining, 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.