Asante Gold announces US$525M financing to support Ghana growth plans

Asante Gold (CSE: ASE) says it expects to raise US$525 million in two stages to fund its growth plans in Ghana, where it operates the Bibiani and Chirano gold mines and the Kubi gold project.

The company says the funding will help it grow gold production to half a million ounces annually in four years time from around 100,000 oz. per year.

“Completion of this comprehensive financing package will mark a breakthrough moment in Asante’s history. It will transform our balance sheet and support execution of our growth plan to achieve gold production above 500,000 ounces per year by 2028,” Dave Anthony, Asante’s CEO, said in a release.

The first round funding of US$325 million will pay for key capital projects, including a pit expansion and a new sulphide plant at Bibiani, equipment upgrades at Chirano, and underground development at both sites.

The components of this stage of funding include Asante’s recently announced US$100-million equity private placement, plus an approximate US$100-million refinancing with Kinross Gold (TSX: K; NYSE: KGC), a US$75-million bond funded by Ghanaian investors and a US$50-million syndicated gold stream facility.

The second stage will include a US$150-million senior debt facility, to be arranged by FirstRand Bank, and a US$50-million standby equity commitment from an unnamed strategic investor, for a total of US$200 million.

The company’s plan is to organically grow its gold production through improvements at Bibiani and Chirano, tapping into the roughly 6.6 million oz. in gold resources held across the two mines.

Financing details

As announced early September, the company plans to issue 90.7 million of its Canadian-listed common shares at $1.50 per share via a three-tranche private placement. The first tranche totalling US$25 million closed this week. The remaining tranches (US$35 million and US$40 million) are expected to close in November and December, respectively.

The US$100-million refinancing with Kinross relates to Asante’s US$225-million acquisition of a 90% interest in the Chirano mine, announced in 2022. Under the refinancing terms, Asante will make a cash payment of US$65 million toward the unpaid deferred consideration owed by the company, and finalize the replacement of a letter of credit in support of reclamation obligations for Chirano. Post-transaction, Kinross’s stake in Asante will rise to 9.9%.

The US$75-million bond is envisaged to have a maturity of six years, with quarterly payment of interest in cash during the entire term of the loan and amortization of principal during the final year. The bond will be denominated in Ghana cedis, with the principal balance indexed to the U.S. dollar exchange rate post-closing.

Under the US$50-million gold stream agreement, Asante is anticipated to sell 1.25% of payable gold sold from the Bibiani and Chirano mines at 20% of the prevailing market price. The stream is anticipated to contain provisions for a 50% buyback.

Asante said it expects to complete the first-stage transactions by year-end.

Asante shares rose 3% to $1.36 apiece by 1:00 p.m. ET following the financing announcement, for a market capitalization of $605.7 million.