Detour Gold has amended its existing credit agreement to provide for a new $400 million senior secured revolving credit facility, with an accordion option allowing the company to increase the size of the facility by another $100 million to a total amount of $500 million.
The new credit facility will be used for financial assurance and general corporate purposes.
The new credit facility replaces the company’s previous $500 million senior secured credit facility, which was comprised of a $200 million term loan (maturing July 14, 2020) and a $300 million revolving credit facility (maturing July 14, 2022). The new credit facility has a four-year term, maturing September 25, 2023.
The interest rate for drawn borrowings ranges from Libor + 2.00% to 3.125% (reduced from Libor + 2.215% to 3.125% under the previous facility), depending on the leverage ratio.
The company plans to pay down $100 million in indebtedness under the new credit facility by the end of Q3 2019, and to fully pay down its indebtedness in the coming months. This will translate into estimated interest savings of approximately $9 million per annum (relative to the amount payable under the previous $200 million term loan) and available liquidity of approximately $370 million under the new credit facility.
“The new Credit Facility is representative of our strong cash flow generation and growing net cash position. It delivers not only lower costs, but also increased flexibility and enables us to look at broader capital allocation decisions,” said Jaco Crouse, the company’s chief financial officer.
The co-lead arrangers and joint bookrunners are BMO Capital Markets, Canadian Imperial Bank of Commerce, Commonwealth Bank of Australia, Royal Bank of Canada and TD Securities. Bank of Montreal is the administrative agent.
Detour Gold is a mid-tier gold producer in Canada that holds a 100% interest in the Detour Lake mine, a long life large-scale open pit operation.