- Country: Ghana
- Industry: Energy, Natural Resources, Mining
- Stage: Expansion/Growth
- Investment size: $1,000,000 / min. $450,000
- Type of investment: Debt, Equity
Small established alluvial gold miner in Ghana who has been producing gold for six months is willing to expand production to between 1 and 2 kilograms of gold per day.
The company has been operating in the sector of alluvial mining in Ghana during the 2011 season. It currently owns mining equipment valued at approx. $700,000. The company is mining on one 25 acre concession and has two contiguous concessions available in addition to it. Because it only had one excavator it was unable to take full advantage of the 'economies of scale' as the one machine had to strip, mine, and feed the production plant.
The concessions are located in the richest alluvial mining area in Ghana. Ghana is the second biggest producer of gold in Africa.
The company requires additional funding to purchase additional equipment, prepay farmer’s compensation, and retire a small outstanding payroll [$32,000]. The opportunity for the investor is significant, with short payback time, high interest, and significant profit participation. The company has all government licenses, approvals, and is properly registered as a Mineral Service Provider.
Gold mining is not competitive, in that all gold produced can be sold at current prices less a small smelting commission. Gold produced from the property is very pure-about 22.5 Karats, and refining costs are minimal. Principals of the company are experienced, geologists, engineers, and accountants. The company is Canadian/Ghanaian controlled. The principals of the company have a history of successful alluvial gold mining.
Rationale for the deal
The property is situated in the richest alluvial gold mining area in Ghana.The area is flooded with small scale miners from all over the world, with Chinese nationals predominating. Hundreds of millions of dollars of gold is produced and sold every year by unregistered small scale miners in Ghana. Operating costs for alluvial mining in this area are slightly over $100USD per ounce of gold recovered. Gold is currently selling for over $1,600 per ounce.
Use of financing
The investment is required for expansion. In order to take advantage of the 'dry season', transfer of funds should take place as soon as due diligence has been completed.
Opportunity for the investor
There are two possible investment scenarios:
1. A loan to the company in the amount of $450,000 @ 12% interest repayable in twenty-four monthly installments. As an incentive the investor will receive 3% of gold sales to a minimum of $500,000 in addition to the loan payback. All payable will be in either cash or gold, in any jurisdiction.
2. The investor gives the company a loan in the amount of $1,000,000 @ 12% interest repayable at $25,000 per month. As a consideration the investor receives a 50% profit interest for the life of the project, in addition to the loan payback.
In both cases the investor holds a charge against all of the companies equipment until the loan is repaid.
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