Besra Gold (ASX: BEZ) has executed a non-binding term sheet for the provision of up to US$300 million gold pre-purchase drawdown and offtake funding agreement with Quantum Metal Recovery, one of its major shareholders. The funding gives Besra a clear path to bring its Bau gold project to production in East Malaysia.
Besra believes this is one of the largest financings of its kind undertaken on the Australian Stock Exchange. It gives the company a clear path to gold production, said chair Jocelyn Bennett, without the highly dilutive aspect typical of many capital raisings.
“We now have a clear line of site on commencing production at Bau,” she said, “with our issued capital intact, as well as recourse to little, if any, debt, and the restrictive covenants typically required by lenders.”
Besra will deliver to Quantum 80% of all gold produced from 25,001 to 120,000 oz. and thereafter 65% of all gold produced. The terms leave 35% of production unassigned.
The project is located in the Bau goldfield that shares similar geology to the Carlin trend in Nevada. The region has been successfully mined for over 100 years but ended in the 1990s. Besra holdings cover approximately 94% of the Bau goldfield.
Measured and indicated resources total 21.3 million tonnes grading 1.64 g/t gold (JORC-compatible). There are also 51.3 million tonnes in the inferred portion at 1.32 g/t gold. Resources are inclusive of several deposits on the property.
Besra offered both contract mining and owner operated costs for the project. After taxes, an owner operated mine and 8,000-t/d flotation concentrator would have a net present value of US$76.1 million and an internal rate of return of 29.4%. The numbers are a little stronger with contract mining, being US$72.0 million and 32.6%, respectively. An open pit is planned.
Additional information about the Bau gold project is posted at www.Besra.ca.