West African Resources has secured debt funding worth US$200 ($278) million to advance its ambitions at the high-grade Sanbrado gold project in Burkina Faso.

The company said the facility with private equity group Taurus Funds Management would fully fund it through to gold production at Sanbrado, which is tipped to produce 211,000 ounces of gold a year for its first five years.

The news comes as West African also launches a fully underwritten institutional placement to raise just over $43 million, priced at a discounted 25¢ a share, and a share purchase plan for retail shareholders to raise a further $5 million.

Managing Director Richard Hyde said the debt deal was a good outcome for shareholders.

“The award of the US$200 ($278) million debt mandate to Taurus follows a thorough competitive process involving technical due diligence, site visits and detailed negotiations,” Mr Hyde said.

“We have one of the best undeveloped gold projects globally, an experienced project build team and we now are now fully funded and looking forward to getting Sanbrado into production in the second half of 2020.”

The debt deal includes a fixed interest rate of 7.75 per cent on drawn amounts, no penalty for early repayment and no hedging, with first drawdown expected to be available by the end of the first quarter of 2019.

An updated definitive feasibility study earlier this year showed it would cost about US$185 ($256) million to develop Sanbrado, which would operate at all-in sustaining costs of US$551 ($762)/oz over its first five years and US$640 ($886)/oz over an initial 11-year mine life.

The project will deliver a post-tax net present value of US$405 ($560) million for an internal rate of return of 49 per cent and a 16-month payback period.

The study revealed a 76 per cent increase in probable reserves to 1.6 million ounces on the company’s previous feasibility study released last year.

But Mr Hyde said in June the updated study was merely a snapshot of the project, where further drilling had already revealed more mineralisation at depth, improving further the economics of Sanbrado.