West Perth-based gold miner Avoca Resources Ltd has credited the sucess of its Higginsville Gold Project in Western Australia for enabling the company to secure a $71 million loan for its subsidiary, Avoca Mining Ltd, in the midst of volatile world credit
West Perth-based gold miner Avoca Resources Ltd has credited the sucess of its Higginsville Gold Project in Western Australia for enabling the company to secure a $71 million loan for its subsidiary, Avoca Mining Ltd, in the midst of volatile world credit markets.
The company annoucement is pasted below:
Avoca Resources Limited is pleased to announce that its wholly owned subsidiary, Avoca Mining Pty Ltd (Avoca), has received credit approval for an AUD$71 million multi-option secured facility (Debt Facility) with Société Générale Australia Branch (SocGen) and BOS International (Australia) (BOSI). SocGen will provide 60% of the Debt Facility and BOSI will provide 40% of the Debt Facility.
The Debt Facility will comprise three tranches: (i) AUD$25 million revolving line of credit with an initial term of 30 months from project commissioning which can be extended to a 42 month loan tenor upon certain conditions being met (Tranche 1); (ii) AUD$43 million non-revolving facility with a 6 monthly amortising repayment schedule over a 30 month loan tenor from project commissioning (Tranche 2); and (iii) AUD$3 million performance bond guarantee facility available for the term of the Tranche 1 facility.
The purpose of the Debt Facility is to: - Refinance the existing AUD$21 million unsecured facility ($18 million cash advance, drawn to $13 million, and $3M Performance Bond facility) provided by SocGen in 2006. - Provide replacement funds to facilitate the completion of the construction and development of the Higginsville Gold Project.
Previously, Avoca Resources Ltd had indicated that it would enter into toll treatment/ore purchase arrangements with a third party to treat/buy the ore currently being mined from the Trident underground gold mine at Higginsville.
Discussions with several potential toll treatment/ore purchase parties have failed to reach mutually acceptable terms.
Proceeds from the Debt Facility will replace the revenue that Avoca Resources would have achieved if the toll
treatment/ore sale arrangements originally contemplated had been executed, and will provide Avoca Shareholders with a superior return than would otherwise have been realised from toll treating/ore sales.
Gold production for toll treatment/ore sale up to 30 June 2008 is planned to be 35,000 ounces and revenue from these ounces will be realised through the remainder of 2008.
All project infrastructure, including the 1 Mtpa CIL Higginsville treatment plant, currently remains on time and on budget for a June 2008 commissioning.
The treatment plant is 83% complete with all key components sourced from China either currently on site at Higginsville, or in sea-transit to Fremantle, Western Australia, after which it will be trucked to site. - Provide a general working capital limit for ongoing use.
Such working capital includes the funding of accelerated exploration programs at Higginsville and the newly acquired Chalice and Two Boys gold mines; and the central Higginsville tenement, M15/348.
Budgeted exploration expenditure for the 2007/2008 and 2008/2009 years is AUD$11 million per annum. The provision of the Debt Facility remains subject to the meeting of certain conditions typical for a financing of this nature.
Avoca anticipates financial close and initial draw down in early April 2008. Importantly, neither Avoca Mining Pty Ltd nor Avoca Resources Ltd are required to enter into forward selling hedging contracts for ounces produced as a condition of the bank finance.