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Feature image credit: Wikimedia

NYSE and TSX-listed Golden Star has announced that its subsidiary, Golden Star (Wassa) Limited, has signed a commitment letter for a $20 million secured loan facility with Ecobank Ghana.

The company will use the facility to repay in full its existing $20 million medium term loan facility with Royal Gold.

The repayment of the Royal Gold loan is beneficial for Golden Star as it matures in July 2019 and is subject to an excess cash flow provision, which requires Golden Star to make mandatory repayments of 50% excess cash flow beginning in 2018 until maturity.

No excess cash flow payments have been required to date, but the termination of the Royal Gold loan provides flexibility to the company’s financial position.

There are no prepayment penalties associated with the facility.

The facility will be repayable within 60 months of initial drawdown.

Interest on amounts drawn under the facility is payable monthly in arrears at an interest rate equal to three month LIBOR plus a spread of 7.5% per annum.

“This facility adds flexibility to our financial position and enables us to maintain a stronger cash balance while we continue to ramp up both the Wassa and Prestea underground operations. We are continuing to strengthen the company on all fronts and ensuring we have access to low cost capital is part of this process,” states president and CEO of Golden Star, Sam Coetzer.