Cora Gold signs term sheet to fund Sanankoro project

West Africa-focussed Cora Gold has signed a $21m (£16.82m) mandate and term sheet with investment firm Lionhead Capital Advisors, to fund the future development of its flagship Sanankoro Gold Project in southern Mali, it announced on Thursday.

The AIM-traded firm said the funding was conditional on the completion of a definitive feasibility study before the end of 2021, among other things.

It said the funding would consist of $6m in equity financing, a $5m convertible loan note, and $10m in debt financing.

The definitive feasibility study requirement carried a minimum of a six-year mine life with 40,000 ounces of gold production per year, and a 60% internal rate of return based on a $1,400 per ounce gold price.

It noted that the Sanankoro scoping study, completed in January at a $1,400 per ounce gold price, specified $20.6m in pre-production capital expenditure, $19m per year free cash flow and an 84% internal rate of return, and average production of 45,000 ounces per year.

Cora Gold said its current focus remained on resource growth, with a definitive feasibility study planned for 2021.

“The term sheet is fantastic news for Cora and importantly, significantly de-risks the Sanankoro Gold Project,” said chief executive officer Bert Monro.

“The $21m project financing will fund the Sanankoro Gold Mine based on our scoping study economics, following completion of a positive definitive feasibility study by the end of 2021.

“This is a very strong endorsement for Sanankoro from an investment group linked with our largest shareholder and a consortium of highly experienced and successful natural resources investors on competitive terms.”

Monro said Sanankoro had the potential to be a “highly profitable” oxide mine, with the scoping study highlighting an average free cash flow of $24m per year, and a 107% internal rate of return at a $1,500 per ounce gold price.

“With a supportive shareholder base keen to build production, an existing defined resource with significant scope to expand, and a positive gold price environment, we are extremely excited about Cora's future.

“There is a lot of work still to be done and our team is focussed on delivering on it.”

At 0939 BST, shares in Cora Gold were up 5.33% at 7.9p.