West Red Lake Gold signs term sheet for up to US$95M credit facility
The proposed Centalion refinancing carries a nine-month principal holiday and an offtake covering all gold doré produced from the operation.
Mara Quinlan
West Red Lake Gold Mines Ltd. CVEWRLG OTCMKTSWRLGF said on Monday it signed a binding term sheet with Centalion subsidiary Gunvor USA LLC for a proposed credit facility of up to US$95 million. The proposed refinancing would give the Ontario gold producer 9 months without scheduled principal payments on the initial tranche.
Shares fell to C$0.52 on the TSX Venture Exchange in the Oct. 30 session, according to the CVEWRLG quote timestamped 3 p.m. EST, before Monday's announcement.
The Nov. 2 proposal comprises an initial tranche of up to US$65 million and a second tranche of up to US$30 million requiring additional conditions and approvals. Proceeds would refinance the existing Nebari secured facility, support Madsen mine development and working capital, and potentially fund Rowan development.
Funding still requires satisfactory due diligence, onboarding, internal authorizations, definitive financing and commercial agreements, security and approvals. The proposed offtake would give Gunvor all gold doré produced from the operation; neither the credit advance nor the commercial agreement is presented as completed in the release. The summary does not disclose an offtake duration, purchase-price formula or fixed delivery volume.
West Red Lake Gold reported approximately C$31.2 million in cash and cash equivalents at June 30, in its Aug. 25 results. Monday's term-sheet summary does not quantify net cash available after repaying Nebari, the repayment balance or financing fees, so the facility ceiling cannot be treated as additional cash on hand.
The proposed loan would mature five years after the initial drawdown. Its interest rate would be one-month SOFR plus 5.50 per cent, subject to final diligence and the security package, according to Monday's release.
The original Nebari agreement, announced Jan. 2, 2025, charged three-month SOFR plus 8 per cent, with a 4 per cent floor on the reference rate. That historical contract also required a make-whole payment for early repayment; Monday's summary does not calculate the refinancing's total cost.
Monthly principal repayments on the initial tranche would begin after the holiday. West Red Lake Gold would provide a parent guarantee and first-priority senior security over Madsen and Rowan, while prepayment would carry no penalty but require five business days' notice and payment of outstanding fees and costs.
“The potential second tranche for Rowan aligns with this strategy, providing an additional source of development capital as we advance the project,” chief executive Shane Williams said in Monday's release.
The company plans to use its operating Madsen mill as the processing hub for additional deposits. Its Oct. 27 operating update cut annual production guidance to 27,000 to 32,000 ounces because of labour challenges and the continuing ramp-up.
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West Red Lake Gold's next scheduled financial results are due Nov. 27 after market close.
