Toronto-based LAC Minerals (TSE) has agreed to guarantee a 420,000-oz. gold loan for its 65% owned subsidiary Bond International Gold (TSE). After evaluating various long- term refinancing alternatives, Bond Gold Corp., a unit of BIG, has received a commitment for the loan from a syndicate of banks led by N.M. Rothschild and Sons.
The new loan calls for equal quarterly payments of about 22,110 oz. commencing in January, 1991, with final maturity in July, 1995. The loan may be prepaid without penalty at any time.
The new facility replaces the company’s existing gold loan of nearly 360,000 oz. and the Bullfrog mine project loan of about 110,000 oz. The remaining 50,000 oz. will be repaid from existing cash reserves. Completion of final documentation for the loan is expected by late July, according to LAC.
In 1988, BIG borrowed 421,500 oz. of gold with a value of about US$187 million at $443 per oz. The borrowed gold was used to satisfy the company’s obligations under a forward sales contract of 421,500 oz. at $475 per oz.
The original gold loan was amended in 1989 providing for two $10-million and $25-million payments, with the remaining ounces repayable on July 16, 1990.
The company had planned to renew the gold loan prior to its maturity on July 16 and replace it with another hedge instrument. The transactions serve as a hedge against declines in the market price of precious metals produced at BIG’s mining operations.
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