Tango Mining Limited, the TSX listed company said it has entered into a proposed USD$30m loan commitment with Vanderbilt Commercial Lending, Inc.for the acquisition and capital required for the restart of the previously operating BK11 Kimberlite Diamond Mine in Botswana.
According to an update, Vanderbilt has issued its Loan Disclosure Agreement to Tango which outlines the general parameters for the loan that will be documented in a final Loan Commitment Agreement.
“The outstanding principal, plus accrued and unpaid interest are due at the end of the five-year term of the Loan which includes an 18-month pre-paid interest Reserve Fund,” Tango Mining said in TSX filing.
“The fixed interest rate on the Loan will be the greater of 13% per annum or 975 basis points above the WSJ Prime Rate during the term of the Loan. The Loan will have a first lien position on the BK11 Mine and Tango’s 51% interest in the Kwena Group.”
BK11 Mine is a diamond bearing, champagne glass-shaped kimberlite pipe with a surface area of 8.7 hectares. The pipe itself is located in the Orapa/Letlhakane kimberlite district, which is one of the world’s most prolific diamond producing areas.
Production from the seven years of open pit mining is forecast to yield approximately 569,610 recovered carats with the aggregate life of mine gross revenues from the BK11 Mine being US$188M and an expected post-tax discounted NPV of US$40M and IRR of 43% (8% discount rate).
Tango has entered into a Sale of Shares and Claims Agreement with Firestone whereby the company agreed to acquire 100% of Firestone’s right in the processing facility, and interest and title in the mineral rights comprising the BK11 Mine.
This is held directly or indirectly, through Firestone’s 100% owned subsidiary, Firestone Diamonds Botswana (Pty) Limited, and Firestone’s 90% owned subsidiary, Monak Ventures (Pty) Limited for total consideration of US$8.0M.
Tango also entered into a Sale of Shares of Claims Agreement to acquire the remaining 10% interest in Monak from Tema Thuo (Pty) Ltd. for total consideration of US$800,000. Firestone and Tango agreed to amend certain terms of the Firestone Agreement, such that completion of the BK11 purchase is subject to satisfaction of the following conditions by 8 April 2016: Tango raising the balance of the consideration, being US$7.65M; Tango raising the aggregate ongoing cumulative Maintenance Fees payable from the 1 August 2015 to the Firestone Closing (subject up to a maximum of US$40,000 per month); Obtaining Botswana ministerial approval for the transfer of the controlling interest in Monak and Tango receiving the requisite approvals from the TSX Venture Exchange in respect of the purchase.
If the conditions of the Firestone Agreement are not satisfied or waived by the Firestone Closing date, the purchase will not complete. Furthermore, Tango has agreed to meet certain milestones and in the event such milestones are not met and/or achieved, Firestone has the right to waive such milestones and/or terminate the Firestone Agreement.
About Vanderbilt Commercial Lending, Inc
Vanderbilt is a privately held corporation founded in 1998 in Montana and headquartered in Sacramento, California. Vanderbilt has a diverse investor base, including high net-worth individuals, family offices, financial institutions, insurance companies, pension funds, public funds, trusts, and endorsements, both in the United States and abroad.