China Nonferrous Gold Limited (AIM: CNG), the mineral exploration and mining company currently mining the Pakrut gold project in the Republic of Tajikistan, provides the financial update regardin loan agreement with CNMC.
Following the substantial operational issues that have impacted the company as a result of the avalanches and landslides earlier in the year, the company announces it has signed a short-term financing arrangement with CNMC International Capitals Company Limited, an associate of China Nonferrous Metals International Mining Co., Ltd (“CNMIM”), the Company’s 38.36% shareholder, for a total loan facility of US$6.5 million (“CNMC Loan”) to provide additional working capital.
The CNMC Loan comprises three tranches of US$1 million, US$4 million and US$1.5 million, each tranche is repayable on 15 December 2017, 23 December 2017 and 19 January 2018, respectively.
The CNMC Loan incurs an annual fixed interest rate of 4% on the amount drawn down, interest is payable quarterly in arrears. There is no penalty for pre-payment, however, in the event default an interest rate of 6% per annum will be applied on any overdue amount from the date on which it is due until the date on which it is repaid.
The Company is in discussions with its lending syndicate with regards to a wider refinancing and in order to be able to repay the CNMC Loan and amounts due under the Company’s existing facilities.
Related Party Transaction
As CNMC is an associate of CNMIM, a substantial shareholder in the Company and pursuant to AIM Rule 13, the provision of the CNMC Loan is deemed to be a related party transaction. The Company’s board of directors (excluding Wu Xiang,Yu Lixian and Zhang Hao, who are appointees of CNMIM) considers, having consulted with CNG’s Nominated Adviser, Investec Bank plc, that the terms of the CNMC Loan are fair and reasonable insofar as the shareholders of CNG are concerned.