ASX-listed West Wits Mining chairperson Michael Quinert acknowledged during an AGM of the company the progress that has been made with the company’s primary project Qala Shallows, in South Africa’s Gauteng province

This progress includes a detailed funding model having been developed to underpin the company’s financing initiatives.

A definitive feasibility study on Qala Shallows finds the project can produce 924 000 oz of gold over an 18-year mine life, averaging 70 000 oz/y. The study values the project at $255-million in net present value after tax.

Understandably, there is a level of frustration about how long it has taken for the company to procure funding to allow for the start of the project, Quinert said, which has been exacerbated by contractual and regulatory restrictions.

The company continues to diligently pursue its initiative to procure first tier bank style loans for 50% to 60% of project development funding for Qala Shallows.

The process is comprehensive, reflecting the risk-averse approach of banks as compared to equity markets.

Quinert explained that due diligence had involved detailed investigations by independent experts into all aspects of the project including technical, financial, environmental and legal compliance.

“I am pleased to say that due to the hard work and skill of our executives and consultants we have navigated that rigorous process.”

The two lenders primarily targeted are a commercial bank and a South African development finance institution. The key terms are resolved, the financing models finalised and the due diligence investigations are complete.

Both institutions are now in the process of seeking credit approvals.

West Wits is also engaging with other potential bank lenders who may provide collateral facilities such as fleet finance and working capital facilities, or potentially step in to join the proposed syndicate for the loan project development facility.

“Suffice to say, the robust financial model underpinning Qala Shallows, together with a strong gold price, have provided a platform which has opened discussions on multiple options for funding,” Quinert noted.

However, he added that the company did not have all the desired certainty but remained confident that this project would secure bank style loan funding.

“We are also progressing plans for financing the non-bank component of development costs. There are a range of options which could involve bridging debt, hybrid securities, equity and/or a combination thereof. Upon bank funding approval we expect these discussions to move forward quickly,” Quinert said.

Based on the company’s interactions with the proposed lenders and its advisers, West Wits expects to finalise funding arrangements during the next quarter.