Asanko Gold has secured US$150mn of project financing as well as an offtake agreement from Red Kite Mine Finance for its Esaase gold project in Ghana.

The agreement provides for two facilities: a US$130mn term loan and a $20mn cost overrun facility. The term loan has an interest rate of Libor plus 6%, a two-year principal and interest payment grace period and a four-year quarterly repayment schedule.

The overrun facility has been priced at Libor plus 10% with the same grace period but with a three-year quarterly repayment schedule.

“Importantly, this loan does not have the traditional hedging, cash sweeps and growth restrictions typically associated with project finance,” Asanko CEO, Peter Breese, explains.

“Junior exploration companies have been struggling to secure traditional forms of funding for their projects so the fact that Asanko Gold has been successful in securing finance through an alternative financing structure is very encouraging,” comments Martin McCann, global head of infrastructure, mining and commodities at Norton Rose Fulbright, who advised on the deal.

Red Kite declined to comment on its motivations behind offering financing without any traditional debt financing instruments.

Other previous financings that have waived the hedging, as well as some other requirements, include the Aureus Mining financing.

As part of Asanko’s deal, Red Kite has signed an offtake agreement for 100% of Esaase’s future gold production over the life of the mine.

Red Kite will pay 100% of the value of the gold nine business days after shipment with the gold sale price determined as a spot price selected during a nine-day quotational period following the shipment.

Asanko intends to complete the definitive feasibility study and permitting for the mine during Q4 2013 and will begin the front-end engineering and design immediately. The intended steady state production is 200,000 ounces per year by Q4 2015.