Ora Banda Mining Ltd (ASX:OBM) will receive A$12.74 million in non-dilutive debt and royalty funding from its largest shareholder, Hawke’s Point Holdings LP, which holds 45.29% of the company.
Funding will comprise an unsecured loan and net smelter return (NSR) royalty and will be used towards developing the Riverina Underground Gold Project including exploration, resource development and capital expenditure.
The support from Hawke's Point illustrates its confidence in OBM and its projects.
Funding consists of:
- an unconditional and unsecured loan for A$11 million; and
- a capped net smelter return royalty with respect to certain gold products to Hawke’s Point in return for A$1.74 million; royalty payable at 0.9% NSR and capped at 900,000 ounces of pure gold produced commencing from December 31, 2023.
There are no conditions to drawdown of the loan and OBM expects to receive funds around December 23, 2022.
Royalty payment
OBM has entered into an agreement with Hawke’s Point whereby its wholly-owned subsidiaries agree to pay a NSR royalty on gold doré or bullion produced and sold from existing mining tenements on and from December 31, 2023.
This is in return for A$1.74 million from Hawke’s Point.
OBM managing director Luke Creagh said, “This funding is a great outcome for shareholders because it allows Ora Banda to continue advancing the Riverina Underground Project without delays and demonstrates the support of our major shareholder, Hawke’s Point, to unlock the exploration potential of our highly prospective tenement package.
“Importantly the funding package will also mean no dilution to shareholders whilst operational improvements strengthen the business in the second half of FY2023 ahead of the royalty becoming payable in calendar year 2024.”