Galane secures loan deal with Samsung
Staff Writer | Wednesday August 27, 2014 12:54
In a statement released to the Botswana Stock Exchange, the company said Samsung has agreed, subject to certain conditions, to provide the loan facility to Galane Gold in return for the sale and delivery by the company’s Botswana operating subsidiary, Mupane Gold.
Under the agreement, Galane will provide a minimum of 1,607 ounces of gold per month for a period of two years payable by Samsung at a fixed discount rate to the then prevailing spot price upon delivery.
“Samsung is also provided with the further exclusive option to purchase all gold produced by Mupane above 1,607 ounces per month on a non- discounted basis at the then prevailing spot price for the two year period.
“The loan facility is repayable by the company over the two year period by way of 18 equal principal payments commencing seven months after the initial advancement of the facility,” reads the statement.
Details show that the facility shall be secured first by a pledge of the shares of Mupane and then replaced with a first charge against the assets of Mupane.
Using recent industry forecasts on gold price, it is anticipated that the arrangement will have an approximate cost of capital of 9.1 percent per annum, said Galane gold.
Galane intends to use the proceeds of the facility to repay early, and in full, the outstanding debt and accrued interest owed to IAMGOLD Corporation with the balance for general corporate and working capital purposes.
IAMGOLD sold Mupane mine to Galane in 2011.
With the repayment of this debt Galane says all related contracts at the parent company level, including those prohibiting the payment of dividends, share repurchases, and certain other corporate activities will be removed, allowing the company significant additional flexibility in its pursuit of shareholder value creation.
“After a period of thorough strategic, technical, legal, financial and management due diligence of Galane Gold by Samsung, we are very pleased to have entered into this arrangement which demonstrates Samsung’s support for our company. We are optimistic that this initial arrangement will pave the way for additional collaboration in the future,” Chairman Ravi Sood commented.
Based in London, UK, Samsung C&T U.K. Ltd. operates as a trading and investment company and is a subsidiary of Samsung C&T. Established in 1938, the company, formerly known as Samsung Corporation is part of the Samsung group which is South Korea’s largest conglomerate with interests in construction, electronics, chemicals, finance and numerous other fields.