Theta Gold Mines approves TGME gold mine for development

Theta board approved TGME mine in South Africa’s Mpumalanga region as high gold prices stir investment in historic mining district.

The sun is rising on the TGME gold project in South Africa as prices climb, with a big investor on board. Pic: Getty Images

Special Report: Record high gold prices are stirring the rebirth of an historic South African gold field, with Theta Gold Mines pushing the button on the development of the TGME project.

• Theta Gold Mines pushes the button on development of 100,000ozpa TGME mine in South Africa
• US$4m ($6.2m) private placement to support early works
• Commercial debt syndication process now live after US$35m commitment from South Africa’s IDC credit agency

Located 370km northeast of the global gold and business hub of Johannesburg, the mine’s approval comes amid bullion fetching in the order of US$3264/oz.

That’s around double the US$1642/oz used in a strong feasibility study posted by Theta (ASX:TGM) in 2022, which suggested the project could produce 80-100,000ozpa over a near 13-year mine life at an all-in sustaining cost of just US$834/oz.

Since the July 2022 study gold prices have scaled so high an update will be required, currently due for completion in the September quarter.

That will likely deliver vastly superior economics, with the development already boasting a positive net present value of US$432 million on pre-boom prices.

Mobile Cranes and Flatbed Trucks assisting in deconstructing the old plant. Pic: TGM

Placement to drive early works

Bulk earth works and initial civil engineering at the site has already commenced, with a private placement shoring up working capital ahead of the updated feasibility study’s release.

Hong Kong Ruihua Green Development Limited will subscribe for 47,337,278 shares at an issue price of 13c.

That’s a slim discount of 7.3% to TGM’s 15-day VWAP, with Hong Kong Ruihua also to pick up 23,668,639 options.

Each placement option will also have an exercise price equal to an 8% discount to the 15-day VWAP, but not less than 13c.

Placement funds, which amount to ~$6.2m Aussie, will be used to kick off bulk earthworks and complete plant site terraces, progress civil engineering works and construction and purchase geosynthetic Stabilenka, a geotextile used for reinforcement.

On top of that, the funds will help finalise water management systems and support working capital needs.

Funding on the way

The announcement of the board decision to mine comes the same month TGM announced an agreed credit approved loan facility agreement and indicative funding terms from the Industrial Development Corporation for a US$35m loan.

Forming part of the overall project debt funding, it will make the South African government credit agency a key stakeholder in the project, with a debt term of seven years from first drawdown including an initial 18-month capital and interest moratorium.

Legal, technical and environmental due diligence has been completed, with the announcement opening the path to secure co-lending from commercial banks.

A specialist South African firm, Moore Debt Advisory, has now been secured to run the syndication process, with an information memorandum sent to potential co-lenders.

These key steps put TGM well on the path to production, leveraging over 1Moz of a massive 6.1Moz resource.

“This is a defining moment for Theta Gold, with board approval of the Decision to Mine marking a major milestone in bringing the TGME Gold Project into production,” TGM chairman Bill Guy said. 

“The US$4 million placement strengthens our balance sheet and supports critical on-site works already underway. With updated feasibility work progressing and syndication of project debt financing now live, we’re firmly focused on executing our development strategy.”

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.

Originally published as Theta Gold Mines approves TGME gold mine for development