Cerrado Gold Inc. (TSXV:CERT) (OTCQX:CRDOF) announced it has received and accepted Expressions of Interest (“EOIs”) from UK Export Finance (“UKEF”) to support potential export credit facilities for the Company’s 100% owned the Monte Do Carmo Project in Tocantins State, Brazil (“MDC”) and the Mont Sorcier Iron Ore and Vanadium Project in Quebec, Canada (“MS”) held by its wholly owned subsidiary Voyager Metals Inc.
Major Takeaway
- Loan would support entire upfront CAPEX required for Brazil project and up to 70% of initial CAPEX for Brazil and Quebec projects combined.
- This loan would ensure a doubling of gold production over the next three years.
- Cerrado received 4 expressions of interest, validating the economic attractiveness of both projects.
Details of the Potential Export Credit Facilities
The EOIs provide support for up to US$190 million for the MDC Project and up to $420 million for the MS Project; representing 70% of total capital expenditure, interest payable during construction, the political risk insurance premium as well as other approved expenditures for each project.
UKEF is a department of the UK Government and is the UK’s official Export Credit Agency (“ECA”). UKEF operates under an Act of Parliament to support UK exports, predominately through the provision of 100% unconditional guarantees backed by the UK Government.
UKEF’s engagement with the opportunity is at an early stage. UKEF’s EOI is not a legally binding commitment and is subject to a series of standard project finance terms and due diligence, including, among others, suitable structured offtake contracts, the successful completion of the Definitive Feasibility Study (DFS), and an Environmental and Social Impact Assessment (ESIA) to Equator Principles. The EOI provides an indication of currently available country limits, an indication of the attractiveness of the project, and it covers, in principle, the level of financial support, their flexibility and desired conditions.
UKEF’s EOI is in line with the OECD Arrangements for Officially Supported Export Credits and stipulates minimum UK content requirements whilst enabling equipment to be sourced locally and from other countries.
As previously announced on April 17, 2023 Cerrado appointed SD Capital Advisory Ltd and GKB Ventures Ltd (“S&G”) to solict interest for Export Credit Agency backed Project Financing. As a result of this process they received 4 expressions of interest from ECAs around the world. The Company also received an expression of interest from an additional ECA on an untied basis which may be used to complement UKEF support. The company is very excited with the level of support and interest from the ECA market which highlights the potential for success of both of these projects.
The company has selected UKEF based on numerous factors related to the terms of the Expression of Interest and unique aspects of the capital spend at both MDC and MS.
Together with S&G, the company will now be soliciting interest from Project Finance Banks to act as Mandated Lead Arranger (“MLA”) for the transactions. The Company expects to appoint an MLA by the end of July. Once an MLA has been appointed, detailed due diligence will commence with the aim of receiving final terms for the ECA backed Project Financing at MDC towards the end of the year.
In addition, S&G’s mandate has now been amended to include the structuring and arranging of ECA backed Project Financing for the MS Project.
Cerrado Gold is a market awareness client of Capital 10X.
