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The Youga Gold Project — A West African Project Financing Case Study


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Author J Forwood


The Youga gold mine in Burkina Faso, West Africa, is scheduled to produce first gold in the third quarter of calendar 2007.

The project is expected to produce 540 000 oz of gold over 6.5 years, from a conventional open pit carbon in leach mine. The direct capital cost of the project is US$47 M.

Etruscan Resources Inc, a Canadian based gold exploration and development company, holds 90 per cent of the project company Burkina Mining Company SA (BMC). The state of Burkina Faso is free-carried for the remaining ten per cent of BMC.

RMB Resources Limited, of Melbourne Australia, has arranged a US$35 M project finance facility for BMC (the Borrower) as the majority of funding for the Youga project development. The loan facility was provided by RMB Australia Holdings and Macquarie Bank Ltd (the Lenders) each as to 50 per cent in the lending syndicate. The Lenders also provided a gold hedging facility to guarantee a minimum price for the project’s gold production.

Burkina Faso is a francophone country, part of the Economic and Monetary Union of West Africa (UEMOA). The project financing is the first such facility to be arranged for a mining project in Burkina Faso, with little or no precedent available in other UEMOA countries. Therefore, while the Youga gold project is forecast to be a robust project applying conventional mining and processing methods, a number of legal, technical, commercial and social issues required identification, evaluation and resolution before the loan could be established. This paper describes that evaluation process and the resolution of these issues.

In-house experience and expertise in both the Lenders’ and Borrower’s teams has facilitated a greater understanding and ‘ownership’ of the issues and hence provided comfort with risks which might not normally be taken in conventional project developments and project financings. As a result, blanket external reviews were not required by the Lenders. A long-standing relationship between Etruscan and RMB Resources also facilitated solutions to a number of issues. Nevertheless, a degree of flexibility by the Lenders, the Borrower and Etruscan was required to successfully close the financing.

Forwood, J, 2007.
Youga gold project – a West African project financing case study, in
Evaluation 2007
, pp
Australasian Institute of Mining and Metallurgy: