Herald receives $81m loan to fund Dairi project

West Perth-based gold mining, mineral exploration and investment company Herald Resources Ltd has announced that it has mandated Société Générale Australia branch to provide senior finance facilities to develop its high-grade Dairi zinc/lead project in Indonesia.

The proposed US$62 million (A$81 million) of loan facilities will consist of two tranches, the project facility - US$54 million (A$71 million) and cost overrun facility - US$8 million (A$10 million).

The company, which has already raised $126million of equity, is confident the facilities will be more than sufficient to fund the estimated project financing requirement of US$140 million (A$194 million).

In February, Herald placed 120 million shares at $1.05 a share with Euroz Securities Ltd clients, which the company believes will broaden Herald's Australian and international institutional shareholder base, to raise $126 million capital to fund its Dairi zinc-lead mine.

At market close, shares in Herald Resources were up .5 cents to $1.195.

Below is the full announcement:

After considering a number of financing offers from banking and smelting groups, Herald Resources Ltd is pleased to announce that it has mandated Société Générale Australia Branch to provide senior finance facilities to develop the high-grade Dairi zinc/lead project.

The proposed US$62m of loan facilities will consist of two tranches, namely:

(1) Project Facility - US$54m
(2) Cost Overrun Facility - US$8m

The above facilities are subject to completion of due diligence, bank credit and joint venture partner approvals. In conjunction with the US$90m of equity already raised by the Company, Herald is confident that the above facilities will be more than sufficient to fund the estimated project financing requirement of US$140m.

The Société Générale offer was chosen having regard to a number of factors, including minimising dilution and maximising flexibility in relation to marketing of the Dairi concentrates.

Société Générale Group
Société Générale is one of the largest financial services groups in the euro-zone, being a recognised leader in capital markets, structured finance and derivatives. The Group employs more than 103,000 people worldwide.