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Theta secures A$110m for South African gold project

Wednesday, October 19th, 2022

ASX-listed Theta Gold Mines has entered into a non-binding streaming term sheet with Sprott Resources Streaming and Royalty Corporation worth A$110-million, in return for a gold stream on the TGME gold project, in South Africa.

Theta said on Wednesday that the TGME stream would be a significant milestone on the path to achieving first gold production at the mine, and would cover some 90% of the TGME gold project’s first stage of $77-million peak funding requirement.

The project is expected to deliver Sprott up to 100 000 oz of gold a year over its life-of-mine (LoM), for which Sprott will pay 10% of the gold price per ounce delivered under the stream. Theta has the option to buy back 50% of the stream based on a pre-agreed price, following which Theta will deliver 2% of the ongoing gold production.

Prior to the initial gold delivery, Theta will pay, either in cash or shares, 9.5% a year interest to Sprott for the funds advanced.

“We are very pleased to announce this significant milestone in our project financing efforts for the construction of the TGME gold project,” said Theta executive chairperson Bill Guy.

“The streaming deal is a much more cashflow-friendly style of financing compared to a straight debt finance. It is less risky to a start-up project where the unique repayment mechanism provides the company the flexibility to manage its cashflow as long as the minimum gold delivery requirements are met.

“Once the Sprott funding is closed, the company may commit to further upgrading our ore reserve base, as well as to potentially further expand our total mineral resource in order to increase production scale and life-of-mine from the existing Stage 1 definitive feasibility study mine schedule, hence creating ongoing significant value growth for our shareholders.”

Guy said that the recently published definitive feasibility study into the TGME project demonstrated robust economics for a horizontal stope underground mining and milling operation with low initial capital cost and high rate of return.

The study estimated that the mine would require a capital investment of A$232-mllion, and was based on the initial development of four mines, and has estimated an initial LoM plan of nearly 13 years, at a processing rate of 540 000 t/y.

First gold production is targeted for the second quarter of 2024, with the plant expected to produce over 100 000 oz/y by the third year of production. Over the LoM, Theta could recover as much as 1.08-million ounces of gold from the 1.24-million ounces mined.

An environmental impact assessment is ongoing with the local authorities and is expected to be completed later this year, along with the final approvals for two water use licences under application.

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