West Perth-based EnviroGold Ltd has terminated, by mutual consent, an exclusive mandate for the financing of its Las Lagunas gold project in the Dominican Republic.
West Perth-based EnviroGold Ltd has terminated, by mutual consent, an exclusive mandate for the financing of its Las Lagunas gold project in the Dominican Republic.
The company said it had become increasingly frustrated by the length of time it was taking to finalise financing despite advice saying the project is financially robust.
EnviroGold said it has taken steps to source alternative funding and has recently negotiated terms for a $US30 million project loan and a $US5 million cost overrun facility with an unnamed major Australian Bank, subject to due diligence.
Representatives of the bank are due to visit Las Lagunas next week.
In April this year, EnviroGold said it will investigate alternative sources of funding for the project following financing delays with the Standard Bank due to the market downturn.
Below is the full announcement:
West Perth-based EnviroGold Ltd advises that the exclusive mandate for financing the Las Lagunas gold project in the Dominican Republic, which the Company signed early this year, has been terminated by mutual consent with the mandated Bank.
The Company has become increasingly frustrated by the time it has taken to finalise the project financing despite advice that the project is financially robust and can support a project loan 30% higher than originally requested by the Company.
Though the Bank has been encouraged to present a credit approved offer for finance as soon as possible, EnviroGold has also taken steps to source alternative funding.
The Company has recently negotiated the terms for a US$30 million project loan and a US$5 million cost overrun facility with a major Australian Bank whose representatives will visit the Dominican Republic next week in advance of completing due diligence on the project within four to six weeks.
Mr Brian Johnson, Executive Chairman of EnviroGold, said that he was extremely disappointed with the slow progress under the previous mandate arrangements but was confident an acceptable credit approved project financing facility would be received by the end of September 2008.
The Company expects the current site earthworks contract to be completed in time for the commencement of construction of concrete foundations in October 2008, which also coincides with the commencement of the dry season in the Dominican Republic. Bidding for concrete and civil works, tankage and structural steel, and mechanical equipment, should be finalised by the end of October 2008.
Major equipment items including the oxygen plant, Isa mill, and ball mill were ordered some time ago to avoid supply delays. Outstanding engineering of pipework, electrical, and instrumentation should be finalised within two months.
Subject to the anticipated finalisation of financing arrangements, the construction of the 85,000 ounces Au per year Albion processing plant is now expected to be completed by the end of 2009.
In any event, EnviroGold is determined to complete the development of the project as soon as possible and access the cash flow and profit available from the extraction of approximately US$470 million of gold and silver from the Las Lagunas tailings dam (refer ASX Announcement 30 January 2008).
Mr Johnson said that it was essential to get the Las Lagunas project up and running in order to move on to EnviroGold's Trujillo gold project in northern Peru, which would involve the Company in both open pit and under-ground mining operations as well as gold and silver extraction from the proposed 75,000 ounces Au per year Albion processing plant.
Mr Johnson also said that he was in discussions with a Canadian exploration company which was establishing refractory gold resources in the Dominican Republic, with the aim of utilising the Las Lagunas process plant in some form of joint venture so as to extend its 6.5 year project life.
A longer amortisation period for the US$50 million plant would also improve the profitability of the Las Lagunas gold project.
