ASX-listed West Wits Mining (WWI) has agreed a credit approved term sheet for a senior debt syndicated loan facility of up to R902.5-million to provide senior funding for development of the Qala Shallows gold project, which is Phase 1 of the company’s Witwatersrand Basin project in South Africa.

The Industrial Development Corporation of South Africa (IDC) and Absa Bank – acting through its Corporate and Investment Banking division –  will deliver about 55% of all project funding for Qala Shallows gold mine.

The IDC will provide up to R465-million with Absa providing the balance. The remaining 45% of project costs will be funded through equity and early revenues.

West Wits says the lenders are committed to supporting sustainable mining and economic development in the region.

West Wits chairperson Michael Quinert says securing this facility will provide the majority of funding for this exciting project on non-dilutive, cost-effective bank loan terms.

“It is satisfying to see we have earned the support of two of the regions most respected lending institutions in Absa and the IDC. This facility provides the strongest foundation to now complete our funding requirements and move quickly to commence work on getting Qala Shallows into production,” says Quinert.

West Wits says proceeds are to be applied to the development, construction, commissioning and operation of the Qala Shallows gold project.

The facility will be drawn down progressively following deployment of a project equity contribution.

Repayment is scheduled to occur over 36 months from completion of the draw down phase which will take some 24 months. Interest rate is variable and linked to the Johannesburg Interbank Average Rate.

The company explains that the agreed term sheet follows the completion of a technical, environmental and legal due diligence process and approval of the loans by the respective primary credit committees of both Absa and the IDC.

West Wits notes that the parties are already moving quickly to work towards finalising legal documentation for execution and achieving financial close.

The company says the execution of the facility and development of the Qala Shallows gold project could potentially create over 1 000 direct jobs in South Africa, providing substantial benefits to the local community, and be a key driver of local economic development over the life-of-mine.

In anticipation of securing this facility, the company has been examining a range of options to procure the balance of funds required to ensure Qala Shallows is fully funded to positive cashflow.

West Wits expects to finalise its plans in this regard and update the market in the near term.