South African banks Nedbank and First Rand Bank are to provide US$88mn to Aureus Mining for the development of the company’s gold project in Liberia.

This debt finance facility will be backed by the Export Credit Insurance Corporation of South Africa (ECIC – the country’s export credit agency) and its final approval is expected before the end of September 2013.

The debt will have a term of six years with a two-year grace period.

In addition, First Rand will provide Aureus with US$12mn in subordinated debt to further finance the project.

Many junior miners and explorers have struggled to find project finance in recent months and Aureus feels that the quality of its asset and its management team helped it to stand out above other miners, CEO David Reading, explains to GTR.

“We have a high-grade project with a quick payback period (2.2 years at an average gold price of US$1,400/oz) and we also have completed a bankable feasibility study,” says Reading.

Despite Aureus being listed both on the London Stock Exchange and the Toronto Stock Exchange, the company chose to seek its debt financing from South African banks, Reading added, because “they are experienced in funding mining projects and understand them”.

The company expects to produce 120,000oz of gold over the first four years and 93,000oz of gold over the last four years.

The project has an operating cost of US$685/oz of gold and a post-tax net present value (NPV) of US$148mn for a base case scenario and US$272mn at current gold prices – both at a discount rate of 8%.

The company expects to begin producing gold in Q1 2015.