Lundin Gold has provided Newcrest early repayment of the gold prepay credit facility to the tune of $173 million.
Newcrest acquired the gold prepay credit facility, together with a stream facility and an offtake agreement in respect of Lundin Gold’s Fruta del Norte mine, for $460 million in April 2020.
“With the early repayment from Lundin Gold, Newcrest has now received cash flows of $451 million (net of withholding taxes) from the Fruta del Norte financing facilities since their acquisition, including cash flows of $325 million (net of withholding taxes) from the gold prepay credit facility,” Newcrest interim chief executive officer Sherry Duhe said.
“This represents an attractive return on this investment and provides Newcrest with additional near-term financial flexibility.”
The Fruta del Norte mine is located in south-east Ecuador and is one of the highest-grade, lowest-cost gold mines in the world.
As a lender, Newcrest will receive cash flows from the Fruta del Norte mine, with approximately 34 per cent of free cash flows from the mine estimated to be directed to service the facilities over the next five years.
“The purchase of these gold prepay and stream facilities and the offtake agreement increases our direct exposure to the cash flow generated by the Tier 1 Fruta del Norte mine, in line with our stated growth strategy,” Newcrest then managing director and chief executive officer Sandeep Biswas said in a 2020 statement.
“The acquisition is expected to be earnings accretive, with the gold prepay and stream facilities expected to provide Newcrest with economic exposure to approximately 400,000 ounces of gold from the mine between 2020 and 2026.
“With gold prices at the levels we see today, Newcrest expects to receive significant cash flows which will rank ahead of Lundin Gold’s equity holders.”
Pursuant to the terms of the agreement, Lundin Gold elected to prepay in full the 10 remaining quarterly instalments of its Gold Prepay Facility based on the price of gold near the end of December 2022.