07/11/2008 - 13:20

Kagara secures $150m in loans

07/11/2008 - 13:20

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West Perth-based miner Kagara has been granted an extension to its $100 million facility by the National Australia Bank while Westpac has provided a $50 million facility.

West Perth-based miner Kagara has been granted an extension to its $100 million facility by the National Australia Bank while Westpac has provided a $50 million facility.

In his address to shareholders, chairman Kim Robinson said both facilities are designed to cover the period of maximum cash drawdown during this month and December as the company stockpiles its copper ore.

The built up of stockpiles comes ahead of the wet season in Queensland.

Mr Robinson said the NAB facility has been extended until October 2009 while Westapc's facility will mature in March next year.

Last month, the company launched a review of its operations and expenditure following a sharp decline in commodity prices as a result of the ongoing financial turmoil.

An initial assessment has stated that Kagara can save around $70 million this financial year if certain operations and exploration programs were scaled back.

"The strategic review has also identified additional operating cost savings, on top of the $70 million .... which will result in a reduction in our net debt position by the end of the financial year using current metal prices and exchange rates," Mr Robinson said today.

"Longer term, we do not expect copper and zinc prices to remain at current levels and as mine closures accelerate globally and prices recover, our higher cost zinc operations at Balcooma and Dry River South will be reactivated to feed the Mt Garnet polymetallic plant.

"As prices improve, we will also reactivate the Mungana base metal treatment plant but in the interim, work will continue on bringing forward the Mungana gold development."

The company is also looking for a joint venture partner for its Admiral Bay zinc project in Western Australia.

Shares in Kagara shed 0.5 cents to 65c at 13:28 AEDT.

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