Showing posts with label mineral production. Show all posts
Showing posts with label mineral production. Show all posts

Monday, June 8, 2015

Minera IRL Announces US$70 Million Bridge Loan and Mandate Letter for Up to US$240 Million for Ollachea Project Financing

LIMA, PERU--(Marketwired - Jun 8, 2015) - Minera IRL Limited ("Minera IRL", or the "Company") (IRL.TO)(MIRL.L)(MIRL.L), announces that it has arranged a US$70 million secured finance facility (the "Bridge Loan") structured by the Peruvian state-owned development and promotion bank, Corporación Financiera de Desarrollo S.A. ("COFIDE") and syndicated through Goldman Sachs Bank USA. The Bridge Loan is expected to be the first step towards a senior project credit finance facility of up to US$240 million, described in a Mandate Letter signed by COFIDE and Minera IRL ("Senior Project Debt Facility"). The Senior Project Debt Facility will be structured by COFIDE, in conjunction with Minera IRL, to build the Company's Ollachea gold project in the Puno Region, southern Peru ("Ollachea", or the "Ollachea Gold Project"). The Company has agreed to COFIDE's participation on the Minera IRL board of directors, subject to the required approvals.

Highlights:

  • The key terms of the Bridge Loan:
    • Interest rate: LIBOR plus 6.17%, payable quarterly in arrears
    • Term: 24 months
    • Structuring and Disbursement Commission of 2.25% along with a US$300,000 upfront fee, paid on the disbursement of the Bridge Loan
    • The Bridge Loan is expected to be repaid from the follow-on Senior Project Debt Facility, but is repayable at any point, subject to a 0.75% fee
  • The Company is applying the Bridge Loan funds towards consolidating debt and will apply net proceeds towards advancing the development of Ollachea as well as funding a limited resource expansion drilling campaign. Use of proceeds are expected to include:
    • Repayment of the Macquarie Bank debt facility
    • Final property payment to Rio Tinto
    • Commencing the detailed engineering and design of the Ollachea plant
    • Pre-construction project development work
    • Resource expansion drilling at the Minapampa Far East Zone at Ollachea
    • Continue its commitment to social and environmental programs
    • Financing and advisory expenses
    • General corporate expenses and working capital
  • The Company has signed a Mandate Letter with COFIDE to structure a Senior Project Debt Facility for up to US$240 million which includes retirement of the Bridge Loan.
  • Minera IRL expects to seek equity participants to reduce the amount of debt and leverage on the project to what the Company determines to be an acceptable level, and will include input from COFIDE and potential debt and equity providers.
  • It is expected that one or more financial institutions will be invited to participate in the Senior Project Debt Facility.
  • Although there can be no guarantee on the timing and terms, it is the intent of COFIDE and Minera IRL to have the Senior Project Debt Facility in place prior to the end of 2015.
  • The Bridge Loan is secured by the Ollachea Gold Project's assets, mining reserves, mining concessions and rights, guarantees from Minera IRL S.A., and a pledge of the shares of the Company's subsidiary Compañía Minera Kuri Kullu S.A., which owns 100% of the Ollachea Gold Project.
  • Specifics of the Macquarie debt repayment and Rio Tinto property payment include:
    • Repayment of US$30 million Macquarie Bank debt facility (plus accrued interest) and release of associated security.
    • Payment of US$12.9 million of the US$15.1 million outstanding to Rio Tinto, under the Ollachea Mining Rights Transfer Contract, and release of associated security. The remaining US$2.2 million outstanding has been be converted into an unsecured promissory note, accruing interest at a rate of 7% per annum, payable by 31 December 2015, either in cash or ordinary shares of Minera IRL, at the discretion of the Company (the "Agreement Regarding Payment").

Transaction Considerations

In addition to the Structuring and Disbursement commissions outlined above, Minera IRL has committed payments totalling US$2.6 million for services relating to legal assessment, technical and financial advisory. Likewise, the Company has granted 11.6 million options (exercisable for a year following the commencement of commercial production from the Ollachea Gold Project at an exercise price of C$0.20) and a 0.9% net smelter return over the Ollachea Gold Project. The Company has a right of first refusal on the sale of the royalty and can repurchase the royalty, at its option, up until the date that Minera announces final commissioning of the project.

Related Party Transaction

Under the AIM Rules, Rio Tinto is deemed to be a related party of Minera IRL due to its substantial shareholdings in the Company. As such, the Agreement Regarding Payment is deemed to be a related party transaction under the AIM Rules. The directors of Minera IRL consider, having consulted with the Company's Nominated Adviser, Canaccord Genuity Limited, that the terms of the Agreement Regarding Payment is fair and reasonable insofar as shareholders are concerned.

Commenting on the Ollachea financing package, Daryl Hodges, Minera IRL's Executive Chairman, stated, "This transaction is an important first step for Minera IRL and is the culmination of efforts of the Minera IRL team, working closely with COFIDE and its advisors. Minera IRL can now focus on taking final steps toward financing its flagship project to production. With support from COFIDE, the Company is in a much better position to arrange financing for Ollachea, build the project, deliver on its commitments to the local community to create jobs, wealth for the benefit of the region, and create new opportunity for its shareholders. We cannot neglect to mention that this was the dream of Courtney Chamberlain, whose untimely passing was felt by all."

Dr. Diego Benavides, Minera IRL's Interim CEO and Executive President of Minera IRL S.A., continued, "The financial backing from COFIDE is the result of over 18 months of discussions, comprehensive project evaluation, and due diligence by independent consultants. The support of COFIDE is an endorsement of the technical quality of our Ollachea Gold Project and its importance to the Ollachea Community and the Puno region. We now have the opportunity to focus on working with the Ollachea community, our true long-term partners, in developing an outstanding modern mining operation providing key economic benefits to the Puno region and, indeed, to Peru."

Mr. Jorge Ramos, General Manager of COFIDE, commented, "We are very pleased to be able to offer this financing package to Minera IRL. Ollachea represents an economically robust gold project and this is an excellent opportunity for COFIDE's first mine project financing. We have confidence that the Minera IRL team will ensure that the Ollachea Gold Project will be a great success, which will have important benefits for the Ollachea community and Peru."

Mr. Juan Luis Valeriano, President of the Community of Ollachea, stated, "After eight years of working in partnership with Minera IRL, indeed sharing a close friendship, we are glad that COFIDE, an institution of the Peruvian Government, is providing the financing for the development of the Ollachea mine. The new mine will provide long-term benefits to our local economy, especially towards job creation, social projects, and spin-off business opportunities for many of our citizens. Ollachea will also be Peru's first 'Partner Community' with a mining company with the community holding a 5% shareholding in the project."

Wednesday, January 30, 2013

Global outlook is positive for US coal and minerals mining, says NMA CEO

The following points were made today by National Mining Association (NMA) President & CEO Hal Quinn at a press briefing held at NMA's Washington, D.C., headquarters:

"The outlook for U.S. coal and minerals mining in 2013 is positive due to clear improvements in key sectors of the U.S. economy and the global demand for mined products, particularly in developing economies. While we see continued slow growth in the overall U.S. GDP and another slight contraction in Europe, projected increases in domestic new-home construction and automobile sales forecast to reach 15.3 million in 2013 are buoying demand for copper, palladium, molybdenum and other metals that are vital to these sectors. U.S. copper production, alone, is expected to be up by more than 10 percent in 2013, according to mineral commodity specialists at the U.S. Geological Survey (USGS).

"Iron ore production will benefit from infrastructure projects and stimulus spending in China, the world's biggest buyer and the purchaser of 40 percent of worldwide production of all base metals.

"Gold demand is expected to remain relatively strong, according to GFMS and USGS analyses, driven by continued financial uncertainty, central bank purchases of gold to diversify reserve assets and the continuation of current monetary policies here and abroad. At this point, the USGS expects a slight uptick in 2013 U.S. gold production. Silver tends to run in tandem with gold, based on investor demand, but has a variety of industrial applications that will be strong in China, in particular.

"Coal is on track to become the world's primary energy source—surpassing oil—by 2015, according to Wood McKenzie, two years ahead of the International Energy Agency's current estimate. Here at home, coal's contribution to meeting electricity demand will increase by nearly 45 million tons over 2012 levels, and total domestic consumption will rise by 50 million tons due to slight improvements in the U.S. economy; cooler weather; and natural gas prices that are expected to increase by 22 percent, according to the Energy Information Administration (EIA).

"Demand for coal in Europe has increased—particularly in Germany and Britain—in response to higher gas prices. Demand for coal throughout Asia for electricity and steel production contributes to a robust U.S. coal export forecast of 111 million tons in 2013.

"With these improved conditions for coal production and demand in 2013, NMA expects total U.S. coal production to come in at 1.016 billion tons in 2013—slightly more optimistic than EIA's January short-term forecast.

"Longer-term, NMA expects U.S. coal to benefit from recent and planned construction of higher efficiency coal-based power plants with higher output rates and lower emissions. The remaining coal fleet will, on average, be larger, more efficient and run at higher capacity—recovering at least 100 million tons of U.S. coal production lost to retirements of older plants.

"We continue to see improvements in U.S. mine safety and health. We finished 2012 with the second safest year on record for mine fatalities. Nonetheless, we are well short of our goal of eliminating fatalities and reducing our injury rate by 50 percent by 2015. We believe NMA's CORESafety® safety and health management system gives our operations and the people who work there the tools to reach that goal.

"Public policy challenges continue to limit the potential of U.S. mining to provide reliable materials and affordable energy vital to our economy and way of life. Inefficient and unpredictable permitting processes thwart investments that provide high-paying jobs and added value throughout the chain of production. Regulations that needlessly limit our energy options by halting the construction in the U.S. of new advanced coal plants that can serve as the platforms for cleaner coal technologies worldwide are a failure of ambition and policy. If the U.S. wants to compete with the world's fastest growing economies and remain in the forefront of technological innovations, we must address these critical shortcomings."

Note: NMA's outlook for the U.S. and global economy is drawn from a variety of economic forecasts, including the International Monetary Fund's forecasts of last week. Similarly, NMA's outlook for metals demand and U.S. production relies on a variety of public forecasts, mineral commodity specialists at the U.S. Geological Survey and leading U.S. and international producers. NMA's coal outlook is developed annually by NMA's Economics Committee and is reviewed and updated every six months.

The National Mining Association (NMA) is the voice of the American mining industry in Washington, D.C. Membership includes more than 325 corporations involved in all aspects of coal and solid minerals production including coal, metal and industrial mineral producers, mineral processors, equipment manufacturers, state mining associations, bulk transporters, engineering firms, consultants, financial institutions and other companies that supply goods and services to the mining industry.

Saturday, March 3, 2012

Peruvian Mining production in January

Peru's mineral production fell 0.02% in January year-on-year, according to national statistics and information bureau INEI.
Zinc output fell 15.7%, tin was down 7.87%, molybdenum dropped 5.07%, iron ore declined 3.31% and copper production decreased 3.07%, INEI said.

Gold production was up 13.2%, silver rose 4.94% and lead increased 3.69%.

Peru is the world's second largest silver producer after Mexico and the second largest copper producer. It is the top gold producer in Latin America and sixth globally. The country is also the second biggest zinc producer in the world.

Minerals represent nearly 60% of the country's total exports.