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Macquarie Bank Upsizes, Restructures $90MM Credit Facility for Golden Star

June 01, 2021, 08:08 AM
Filed Under: Mining
Related: Macquarie Bank

Golden Star Resources announced the restructuring and upsizing of the senior secured credit facility with Macquarie Bank Limited. All monetary amounts refer to United States dollars.


  • The Credit Facility, an amortizing term loan, has been restructured to a three-year revolving credit facility ("RCF").
  • The capacity of the Facility has been extended to $90 million, representing a $20 million increase.
  • With $60 million of the Facility currently drawn, Golden Star has $30 million of available liquidity from the upsized Facility.
  • The change in the structure of the Facility removes the near term capital repayment amortization profile, providing up to $50 million of additional liquidity in 2021 and 2022.
  • Interest charge of LIBOR plus 4.00%-5.25%. The Company expects to remain in the lower end of this range based on forecast net debt:EBITDA ratios. The revised pricing is therefore expected to result in a 0.25%-0.50% saving relative to the current pricing of 4.5% plus LIBOR.
  • As part of the restructuring of the Facility, Golden Star has entered into zero cost collar hedges for 84,375 ounces with a floor price of $1,600 per ounce and a ceiling price of $2,115 which amortize on a quarterly basis over a three-year period.

Andrew Wray, President and Chief Executive Officer of Golden Star, commented: "Restructuring the Credit Facility to an RCF and increasing the capacity reflect the progress made over the last year in improving the financial position of the business. The RCF structure removes the capital repayment amortization profile of the Credit Facility and better aligns the Facility with the investment in the growth of the Wassa gold mine outlined in the recent updated technical report.

Following the repayment of the higher cost convertible debentures in August 2021, overall indebtedness is expected to be at a conservative level and forecast net debt:EBITDA ratios should see us achieve the lower end of the interest cost range. We expect to achieve an improvement in our cost of capital, equating to an annual saving of up to $2.7 million.

The extension of the gold price protection program into 2024 secures an attractive floor and ceiling price for the period, further de-risking the Company's ability to deliver on its financial obligations while also investing in the growth of Wassa."

Revolving Credit Facility
The Credit Facility has transitioned from an amortizing term loan to a three-year RCF. The capacity of the Facility has also been upsized to $90 million, a $20 million increase on the current capacity. This immediately creates $30 million of liquidity over and above the current drawn balance of $60 million. In order to draw down the incremental debt capacity, the Company must meet a $35 million forecast minimum cash covenant at the time of draw down, net of an assumed repayment of the 7% convertible debentures maturing in August 2021, before reducing to $25 million for the remaining life of the Facility.

The restructuring also removes the $5 million quarterly capital repayment amortization profile which was due to come into effect in Q3 2021 if the Facility was fully drawn, or Q1 2022 if the current $60 million drawn amount was sustained. Therefore, this releases a further $10 million of liquidity in 2021 and $20 million in 2022.

The capacity of the restructured Facility remains at $90 million to June 30, 2023, when it steps down to $50 million until maturity on June 30, 2024. The term of the RCF and the step down in the capacity will be reviewed annually and could be further extended, subject to the successful conversion of mineral resources to mineral reserves through the planned infill drilling program.

As a condition of amending the Facility, the Company has extended its gold price protection hedging program into 2023 and the first half of 2024 by entering into zero cost collars with Macquarie on an additional 84,375 ounces. This brings the total hedging to 160,938 ounces with 10,938 ounces maturing on June 30, 2021, and the remainder at a rate of 12,500 ounces per quarter from September 30, 2021 to June 30, 2024. The hedging program now covers 25-30% of the forecast production during the current term of the RCF. All hedges have a floor of $1,600 and an average ceiling of $2,171 in 2021 and $2,179 in 2022 and a flat ceiling of $2,115 in 2023 and 2024.

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