Aureus Mining: Banks have completed due diligence on New Liberty

Aureus Mining’s (LON:AUE, TSE:AUE) latest update confirmed the group is a strong position as it finalises financing for its New Liberty Gold Mine in Liberia.

The group finished the first half with US$53.9mln in cash and total assets of US$152.3mln. 

The initial cost to develop the operation is put at US$136mln and Nedbank and Rand Merchant Bank are arranging the project finance required build the project.

Aureus said on Tuesday the banks have completed their detailed due diligence on New Liberty and credit committee approvals are expected by the middle of the current quarter, allowing the group to draw down funds by year-end.

To date Aureus has incurred capital costs of around US$18mln as it makes preparations to bring the mine into production late next year.

The order for the ball mill, the key long lead item, was placed in May with delivery expected 12 months after that date.

The company’s definitive feasibility study revealed the project economics are fairly robust, even in the current uncertain environment for the precious metal.

Based on a flat gold price of US$1,400 an ounce, New Liberty has a pre-tax net present value of US$230mln, giving a pre-tax internal rate of return of 29%.

The life of mine operating cash cost, meanwhile, will average US$669 an ounce, using contract mining.

Chief executive David Reading said: "Aureus has made significant progress in the first half despite the economic downturn for gold companies.  

“The completion of the optimised definitive feasibility study and the commencement of the construction phase at New Liberty have ensured we are well on our way to achieving our strategic goals for 2013, as well as smoothly and rapidly transitioning the company from explorer to developer.  

“Our discussions with the mandated banks continue to be constructive, with detailed due diligence concluded and the financing process for the completion of credit approval nearing completion."

Separately, Tuesday’s figures revealed Aureus posted a modest loss of US$600,000 for the three months ended June 30.