Indicative Terms for up to US$175m in a potential UKEF (UK Export Credit Agency) Supported Project Financing
Banco Santander S.A. appointed as Mandated Lead Arranger due to extensive experience in ECA and Resources sector financing with a significant presence Brazil
(All numbers reported in US dollars)
TORONTO, ON / ACCESSWIRE / December 5, 2023 / Cerrado Gold Inc. (TSX.V:CERT)(OTCQX:CRDOF) ("Cerrado" or the "Company") is pleased to announce that further to the October 18, 2023 announcement in relation to potential Export Credit Agency ("ECA") Supported Project Financing of up to $175 million, the Company has appointed and executed an Engagement Letter with Banco Santander S.A. ("Santander") as the Mandated Lead Arranger ("MLA") for its Monte Do Carmo Project in Brazil. Santander has now executed the engagement letter and completed administrative procedures and onboarding, and plans to initiate the due diligence process within the coming weeks.
As announced on September 5th, the Company together with its advisors, SD Capital Advisory Ltd and GKB Ventures Ltd ("S&G"), initiated a tender process to solicit interest from global Project Finance Banks to act as the MLA for the Company's Brazil and Quebec projects. As a result of this competitive process, the company received compelling bids. Together with the Company's advisors, the bids were evaluated based on ECA Project Finance Experience, execution capabilities and ultimately the financial terms for the Project Financing. Santander has extensive experience in ECA financing, a longstanding relationship with UKEF, and presented competitive and compelling terms for the project financing. Additionally, Brazil is one of the core markets for the Santander which is also one of the Top 20 largest Financial Institutions, globally.
The UKEF backed facility is expected to be for up to US$175 million on a non-recourse project financing basis for a total tenor of 8 years. The funding will be to cover 70% of the expected project capital expenditures for the Monte Do Carmo Project.
As is common for ECA supported Project Financing, UKEF provides political and commercial guarantees to project lenders, thereby lowering the overall project risk to the lender and resulting in lower costs of capital. This reduces the cost of debt to Cerrado Gold whilst at the same time extending tenors and creating debt capacity not normally available in the commercial bank market. To secure such support, project developers commit to a pre agreed level of procurement from UK based organizations for goods, services and materials. UKEF's mandate is to promote and support exports from British companies in the global market.
The appointment of the MLA is on an exclusive basis and sets out the indicative terms upon which the proposed ECA financing is expected to be based. For the avoidance of doubt, the terms are purely indicative and do not constitute an offer of finance or a legally binding commitment of any kind to provide finance. The provision of any binding offer is subject to, among other things: credit and other internal approvals; E&S approvals; satisfactory due diligence and documentation; satisfaction of KYC requirements and other terms customary for this type of transaction.
While the conclusion of project financing remains subject to the granting of construction permits, due diligence, amongst other requirements, the appointment of Santander as MLA is a significant milestone for the project financing of the Monte Do Carmo Project. At the Monte Do Carmo project, work continues to advance the permitting with our Construction License expected in the coming months. The Company is preparing the issuance of its 43-101 Feasibility Study report and once completed will commence comprising of a formal due diligence period before a final binding offer and documentation.
Mark Brennan, CEO and Chairman, stated: "We are very pleased to have the support of such a well-regarded and experienced financial institution such as Santander as MLA to lead our Project Financing in partnership with UKEF as we progress with the development of Monte Do Carmo. We view the support of Santander and UKEF as another indication of the robust nature of the Monte Do Carmo project".
About Banco Santander S.A.
Banco Santander, S.A is a Spanish multinational financial services company based in Madrid and Santander in Spain. Additionally, Santander maintains a presence in all global financial centers as the 17th-largest banking institution in the world. Although known for its European banking operations, it has extended operations across North and South America, and more recently in continental Asia. It is considered a systemically important bank by the Financial Stability Board.
Santander has been designated as a Significant Institution since the entry into force of European Banking Supervision in late 2014, and consequently is directly supervised by the European Central Bank.
Cerrado Gold is a Toronto-based gold production, development, and exploration company focused on gold projects in South America. The Company is the 100% owner of both the producing Minera Don Nicolás and Las Calandrias mine in Santa Cruz province, Argentina, and the highly prospective Monte Do Carmo development project, located in Tocantins State, Brazil. In Canada, Cerrado Gold is developing it's 100% owned Mont Sorcier Iron Ore and Vanadium project located outside of Chibougamau, Quebec.
In Argentina, Cerrado is maximizing asset value at its Minera Don Nicolas operation through continued operational optimization and is growing production through its operations at the Las Calandrias Heap Leach project. An extensive campaign of exploration is ongoing to further unlock potential resources in our highly prospective land package in the heart of the Deseado Massif.
In Brazil, Cerrado is rapidly advancing the Serra Alta deposit at its Monte Do Carmo Project, through feasibility and into production. Serra Alta is expected to be a high-margin and high-return project with significant exploration potential on an extensive and highly prospective 82,542 hectare land package.
In Canada, Cerrado holds a 100% interest in the Mont Sorcier Iron Ore and Vanadium Project, which has the potential to produce a premium iron ore concentrate over a long mine life at low operating costs and low capital intensity. Furthermore, its high grade and high purity product facilitates the migration of steel producers from blast furnaces to electric arc furnaces contributing to the decarbonisation of the industry and the achievement of SDG goals.
For more information about Cerrado please visit our website at: www.cerradogold.com.
CEO and Chairman
Vice President, Investor Relations
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This press release contains statements that constitute "forward-looking information" (collectively, "forward-looking statements") within the meaning of the applicable Canadian securities legislation, all statements, other than statements of historical fact, are forward-looking statements and are based on expectations, estimates and projections as at the date of this news release. Any statement that discusses predictions, expectations, beliefs, plans, projections, objectives, assumptions, future events or performance (often but not always using phrases such as "expects", or "does not expect", "is expected", "anticipates" or "does not anticipate", "plans", "budget", "scheduled", "forecasts", "estimates", "believes" or "intends" or variations of such words and phrases or stating that certain actions, events or results "may" or "could", "would", "might" or "will" be taken to occur or be achieved) are not statements of historical fact and may be forward-looking statements.
Forward-looking statements contained in this press release include, without limitation, statements regarding the business and operations of Cerrado. In making the forward- looking statements contained in this press release, Cerrado has made certain assumptions, including, but not limited to completing the feasibility study and securing UKEF's support for the Monte Do Carmo Project, raising sufficient funds to cover the balance of project capital expenditures not covered by project financing, other conditions of closing a transaction with UKEF and the MLA including but not limited to those described in this news release. Although Cerrado believes that the expectations reflected in forward-looking statements are reasonable, it can give no assurance that the expectations of any forward-looking statements will prove to be correct. Known and unknown risks, uncertainties, and other factors which may cause the actual results and future events to differ materially from those expressed or implied by such forward-looking statements. Such factors include, but are not limited to general business, economic, competitive, political and social uncertainties. Accordingly, readers should not place undue reliance on the forward-looking statements and information contained in this press release. Except as required by law, Cerrado disclaims any intention and assumes no obligation to update or revise any forward-looking statements to reflect actual results, whether as a result of new information, future events, changes in assumptions, changes in factors affecting such forward-looking statements or otherwise. Forward-looking information is subject to a variety of risks and uncertainties, which could cause actual events or results to differ from those reflected in the forward-looking information, including, without limitation, the risks described under the heading "Risks and Uncertainties" in the Company's most recent Management's Discussion and Analysis and other risks identified in the Company's filings with Canadian securities regulators, which filings are available on SEDAR at www.sedar.com. The risk factors referred to above are not an exhaustive list of the factors that may affect any of the Company's forward-looking information. The Company's statements containing forward-looking information are based on the beliefs, expectations and opinions of management on the date the statements are made, and the Company does not assume any obligation to update such forward-looking information if circumstances or management's beliefs, expectations or opinions should change, other than as required by applicable law. For the reasons set forth above, one should not place undue reliance on forward-looking information.
SOURCE: Cerrado Gold Inc.
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