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Atlantic Gold Secures $115 Million Project Debt Financing for the Development of the MRC Project

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Atlantic Gold Secures $115 Million Project Debt Financing for the Development of the MRC Project

 

 

 

 

 

Atlantic Gold Corporation (TSX-V:AGB) is pleased to announce that following a competitive selection process, it has received and executed a credit approved commitment letter for a $115 million Project Loan Facility to be arranged and fully underwritten by Macquarie Bank Limited and Caterpillar Financial Services Corporation to fund the majority of the construction costs of the Company’s Moose River Consolidated Project in Nova Scotia.

 

 

Macquarie Bank and Cat Financial are recognized global leaders in the provision of mining project finance. Macquarie Bank is part of Macquarie Group, a global financial services provider with offices in 28 countries and expertise covering banking, financial, advisory, investment and funds management services. As the captive finance company for Caterpillar, Cat Financial has provided financial service excellence and helped Cat® equipment customers make progress possible for more than 30 years. With a global presence in every mining market, Cat Financial focuses on customized financial solutions built to fit customers’ unique needs in the ever-changing mining industry.

 

 

The PLF carries an interest rate of the Canadian Dealer Offered Rate, or CDOR, plus a margin 5% (pre-Project Completion), reducing to 4.5% post-Completion, and is repayable in quarterly installments over three years commencing late 2017. In order to mitigate gold price risk and as a condition of the PLF, Atlantic will enter into margin free gold forward sales contracts of 215,000 ounces, representing approximately 30% of total recovered life of mine gold production of the MRC Project at an agreed minimum Canadian dollar forward price of $1,500. A defined amount of hedging is expected to be put in place in advance of the signing of a definitive Credit Agreement pending certain conditions being met, in order to fix the sale of gold at a favorable Canadian Dollar gold price.

 

 

The provision of the PLF will be subject to completion of due diligence, project finance documentation and typical conditions precedent for a financing of this nature.

 

 

Steven Dean, Chairman and CEO commented, “Atlantic is pleased to have reached agreement with a world class group of lenders such as Macquarie Bank and Cat Financial for a project loan facility, adding to the list of completed milestones for the development of the MRC Project. Atlantic continues to take full advantage of the low cost of structured debt capital versus equity capital at this time of the industry cycle, balanced by a structured risk management approach to the development of our low cost MRC project.

 

 

This announcement also represents a major catalyst in providing substantial economic development for the Province of Nova Scotia. The PLF should provide a significant level of comfort to Nova Scotians in ensuring the construction of the first open pit gold mine in Nova Scotia, creating an estimated 781 jobs (person-year equivalent) during the construction phase and 228 jobs (person-year equivalent) during operations for the Province.

 

 

The Company is looking forward to the finalization of a definitive credit agreement, in parallel with the execution of an EPC Contract with Ausenco, to crystallize the most significant pieces required to break ground on construction over the coming months”.

 

Posted February 22, 2016

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