Canada-based TVI Pacific has signed a nonbinding term sheet with the Philippines’ Metropolitan Bank for a $20m loan facility that will fund its Balabag Gold/Silver project.

The purpose of the facility is to support the development of the project by providing TVI Resource Development (TVIRD) with additional working capital funding for construction and commissioning activities and to support mining and processing activities.

TVI chairman and CEO Clifford M. James said; "We are pleased to conclude these financing discussions with Metrobank and to be provided the opportunity to move forward with Balabag once the remaining required permits are received. With the term sheet, we have addressed a further integral step in our efforts to establish commercial production at our Balabag Gold project."

The loan facility will have a three-year term and a one-year grace period before payments are expected to commence with an interest rate set at 90-day Libor plus 250 basis points (approximately 3%), computed quarterly.

Metropolitan Bank’s facility is accompanied by an additional $3m Letter of Credit, available to TVIRD for a 180-day period at the prevailing market rate.

"The facility and LOC contemplate that the obligations of TVIRD under those instruments will be secured by the Balabag off-take agreement and Balabag Mining Production Sharing Agreement, a Continuing Surety Agreement to be provided by TVI, the equipment and facilities at Balabag, and a $5m deposit that will be releasable upon the Balabag mine site moving into operation," said TVI in a statement.

Plant construction at the Balabag project is targeted for the second half of 2013 and first doré production by Q1 of 2014.

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