Theta (ASX:TGM) cornerstones gold field rebirth
October 19, 2022Theta Gold Mines has signed a $110 million deal with Sprott Streaming and Royalty to bring South Africa’s first ever-gold project back into production.
Theta’s’ TGME Gold Project is targeted to deliver to Sprott up to 100,000 ounces of gold over its Life-of-Mine, for which Sprott will pay 10 per cent of the gold price per ounce delivered under the stream.
Theta can buy back 50pc of the stream based on a pre-agreed price, after which Theta will deliver 2pc of the ongoing gold.
The buy-in will be spent on pre-development, development capital and operating expenditures.
The Company said the TGME Stream would be a significant milestone in achieving Theta’s’ initial 1.24Moz Life of Mine1 strategy of first gold production at the TGME Gold Project.
“We are very pleased to announce this significant milestone in our project financing efforts for the construction of the TGME Gold Project,” Mr Executive Chairman Bill Guy said.
“Sprott Streaming & Royalty is an experienced and well-regarded project finance partner to the mining industry; its parent Sprott Inc. is a New York Stock Exchange and Toronto Stock Exchange dual-listed group, and we are excited to be working with Sprott re- to develop South Africa’s very first gold field.
“The streaming deal is a much more cashflow friendly style of financing than straight debt finance.
“It is less risky to a start-up project where the unique repayment mechanism provides the Company with the flexibility to manage its cashflow as long as the minimum gold delivery requirements are met.”
Price Action
The Company’s ASX-listed shares have risen 25 per cent to 8c in morning trade.
Definitive Feasiblity Study
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. It is expected to be completed later this year, along with the final approvals for two Water Use Licenses (WUL) under the application.
The TGME Stream covers 90 per cent of the TGME Gold Project’s first stage of US$77m peak funding1 requirement; the funding provides further confidence for the Theta board to deliver its growth strategy to achieve a 160,000 oz p.a production profile within five years with potential to expand the mineral resource and incorporate up to 40 other mines near to the plant site.
The Stream funding is conditional on the completion of due diligence, final definitive documentation, cost to complete certificate and South African regulatory approvals.
The TGME Stream enables Theta to gain total exposure to future gold price movements as it does not require Theta to set up minimum hedging positions.
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