Akobo Minerals AB (Euronext Oslo – ticker “AKOBO”), the Scandinavian-based Ethiopian gold exploration and boutique mining company, today announced with reference to the stock exchange announcement of 10 August 2022, that it has successfully secured a US$ 8.5 million gold loan facility from US based Monetary Metals.
Image Credit: Akobo Minerals
The net proceeds from the loan facility, secured through its wholly-owned subsidiary, Abyssinia Resources Development AS, will ensure that Akobo Minerals has the financial strength to accelerate the final phase of its mine development at Segele. Gold production is on-track to commence in early 2023.
Jørgen Evjen, CEO of Akobo Minerals, stated: “This financing agreement with Monetary Metals gives Akobo Minerals exactly what we were looking for – a loan facility that will take us through to completion of our mine and the start of gold production, while at the same time ensuring a minimal dilution of equity for our shareholders. We can now look forward to mining and production in the new year with renewed confidence.
“Furthermore, the deal with Monetary Metals shows a strong international endorsement of our gold exploration and mining project in Ethiopia. We have greatly enjoyed working with them through the process, which included taking them on a site visit to Segele to show them our developing mining operation.”
Keith Weiner, CEO of Monetary Metals, said: “Jørgen and Akobo’s management team presented us with a professional approach to running the business. Couple that with a remarkable gold deposit at Segele, and you have a very compelling economic proposition.”
The loan facility is structured as a gold loan, whereby Akobo Minerals borrows the principal amount of 5.000 ounces of gold, paid out in US$. The loan can be repaid in gold or the equivalent US$ cash amount using the applicable gold price at the time of repayment. As the loan is pegged to the gold price and also the value of the gold in the Segele deposit, it provides a natural hedge to gold price fluctuations.
The loan facility has a two-year maturity, with an annual interest rate of 22 percent. There are additional provisions regulating early repayment, which also includes a cash sweep of 50 percent of quarterly free cash flow. It is not expected that there will be any cash sweep before the second quarter of 2023. As compensation for arranging the loan facility, Monetary Metals will also be awarded warrants equal to two percent of Akobo’s equity, with a strike price of NOK 6.9 per share.
SpareBank 1 Markets is acting as financial advisor to Akobo Minerals in relation to the project financing, while Advokatfirmaet Schjødt is acting as legal advisor.