AIM-listed Vatukoula Gold Mines has secured US$40 million (FJ$75.4 million) in funding from its largest shareholder, Zhongrun International Mining.
The agreement will see the Chinese investor put up two tranches of around US$20 million (FJ$37.7 million) each that will go towards the Fijian gold miner’s capital expenditure programme for the coming fiscal year.
The first tranche will be through the issue of just under 189 million new Vatukoula shares at 6.89 pence each, while the second will come through its subscription for US$20 illion of secured loan notes.
The company claims to have received “irrevocable undertakings” from around 51 per cent of its shareholders to vote in favour of the equity funding.
Zhongrun currently holds 37.8 million Vatukoula shares but will now own more than 226 million, giving it about 66 per cent ownership.
“We are delighted to have secured the funding to develop the Vatukoula gold mine to its full potential,” said chief executive David Paxton.
“The funding has come from our largest shareholder, which demonstrates the continued confidence they have in the robustness of the Vatukoula gold mine.
“This agreement provides financing support on competitive terms in line with recent financings.”
The debt funding is conditional on the completion of the equity funding and the loan notes will carry an interest rate of 13 per cent a year for six years.
During the first three years of this period, Vatukoula will not make any interest repayments.
Vatukoula Gold Mines’ shares jumped by more than 35 per cent after it entered into the investment agreement with Zhongrun.
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