Sprott will provide $70m cash in advance, in exchange for a gold stream on Theta’s TGME gold project, and is expected to obtain up to 100,000 ounces of gold over the project’s Life-of-Mine (LOM)
Theta Gold Mines has signed a non-binding streaming term sheet with Sprott Resource Streaming and Royalty Corp. (Sprott) to secure funding for its Transvaal Gold Mining Estates (TGME) gold project.
Under the terms of the non-binding term sheet, Sprott will provide $70m cash in advance, in exchange for a gold stream on Theta’s TGME gold project.
Sprott is expected to obtain up to 100,000 ounces of gold over the project’s Life-of-Mine (LOM), for which it will pay 10% of the gold price per ounce delivered.
The Australian gold miner holds an option to buy back 50% of the stream based on a previously agreed price and will deliver 2% of the ongoing gold production.
The transaction will be completed by the first quarter of 2023, subject to certain conditions including the completion of technical, legal, environmental and social due diligence.
In addition, it is also subject to the completion of definitive documentation, receipt of relevant environmental permits, operating licences and regulatory approvals.
Theta executive chairman Bill Guy said: “We are very pleased to announce this significant milestone in our project financing efforts for the construction of the TGME Gold Project.
“The streaming deal is a much more cashflow friendly style of financing compared to a straight debt finance.
“It is less risky to a start-up project where the unique repayment mechanism provides the company the flexibility to manage its cash flow as long as the minimum gold delivery requirements are met.”
Upon a satisfactory conclusion by a due diligence team, both parties will immediately sign, execute and announce to the market, a binding gold stream agreement.
Theta Gold intends to use the funding to support the construction of the TGME gold project.
TGME is an underground gold operation, located in the Eastern Transvaal Goldfields in the Mpumalanga Province, South Africa.
TGME project includes Beta (Beta North, Beta Central and Beta South sections), Rietfontein, Frankfort and Clewer-Dukes Hill-Morgenzon (CDM) mines.
Last month, Theta Gold has secured an environmental licence from South Africa’s Department of Forestry, Fisheries and Environment (DFFE) for its TGME gold project.
Sydney-based debt specialist the Kamara Group served as an advisor and represented Theta Gold on this project financing transaction.
Guy added: “Once the Sprott funding is closed, the company may commit to further upgrading our Ore Reserve base, as well as to potentially further expand our total mineral resource in order to increase production scale and life of mine from the existing stage one definitive Feasibility Study mine schedule.
“The company recently published a definitive Feasibility Study (FS) 2 for the Project demonstrating robust economics for a horizontal stope underground mining and milling operation with low initial capital cost and high rate of return.
“An Environmental Impact Assessment (EIS) is ongoing with the local authorities and is expected to be completed later this year, along with the final approvals for two Water Use Licenses (WUL) under the application.”