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Mining industry

Antilles Gold Secures Binding Memorandum of Understanding with Chinese Mining Group Xinhai

Strategic Insights

— 2 min read

A significant breakthrough has been achieved in the development of the Nueva Sabana mine in central Cuba, with Antilles Gold Limited entering into a binding Memorandum of Understanding (MoU) with Shandong Xinhai Mining Technology Systems Inc, a major Chinese mining and engineering group. The MoU outlines the terms for Xinhai to undertake the engineering, procurement, and construction (EPC) contract for the mine, representing approximately 85% of the estimated US$35.0M required for its development. This EPC contract significantly de-risks the capital expenditure for the project, while also providing for an Operating and Maintenance Contract with Xinhai for the Concentrator.

The MoU involves major parties, including Xinhai, Minera La Victoria SA, Antilles Gold Limited, and its subsidiary, Antilles Gold Inc. It is anticipated that the involvement of Xinhai in both the Nueva Sabana and La Demajagua projects will be a significant factor in ensuring the Cuban joint venture becomes a highly profitable, mid-tier mining company in the near term.

Key Takeaways:

  • The binding MoU sets out the terms for Xinhai to undertake the EPC contract for the Nueva Sabana mine, representing approximately 85% of the estimated US$35.0M required for its development.
  • The EPC contract significantly de-risks the capital expenditure for the project, while also providing for an Operating and Maintenance Contract with Xinhai for the Concentrator.
  • Antilles Gold will raise A$4,130,000 through the subscription of 590M AAU shares at $0.007 each, with Mr. Zhang Zhongyi, a senior executive of Xinhai, taking up the 19.0% shareholding and expected to join the Board of Antilles Gold Limited.
  • Xinhai has committed to providing a US$17.1M Credit Facility for the mine construction by deferring part of its monthly progress claims from the EPC Contract for up to 18 months after the mine's commissioning.
  • The MoU provides for the involvement of Xinhai in the proposed development of the La Demajagua gold-silver-antimony mine, including the first right to negotiate the estimated US$70M EPC Contract and direct participation in the development of the mine.

Statistics:

  • Estimated EPC contract value: US$29.5M (approximately 85% of the estimated US$35.0M required for the mine's development).
  • Total funding required for the project: US$35.0M (with US$29.5M covered by the EPC contract and US$5.5M balance to be undertaken by Minera La Victoria SA).
  • Xinhai's Credit Facility: US$17.1M (to be provided for the mine construction by deferring part of its monthly progress claims from the EPC Contract for up to 18 months after the mine's commissioning).
  • Antilles Gold's share subscription: A$4,130,000 (through the subscription of 590M AAU shares at $0.007 each).
  • Estimated value of the La Demajagua gold-silver-antimony mine: US$70M (for the EPC contract).

Sources:

  • Antilles Gold Limited, News Release, 2023 (no date provided).

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