TORONTO (miningweekly.com) – TSX-listed copper-miner Quadra Mining has received a commitment letter for $37,5-million, in connection with a syndicated $50-million project loan facility for the Franke copper project, in Chile.

Last month, Quadra announced it will buy Centenario Copper, which owns Franke, after the smaller firm had trouble coming up with the funds needed to complete and commission the mine.

Quadra, which already has two producing mines, said at the time that it was confident that it could refinance or restructure the existing project loan facility, which is one of the conditions to the acquisition.

The firm said on Friday it has received a commitment for the $37,5-million from West LB, and the two parties are in discussions with the existing lending group and other lenders to complete the syndication.

The facility comprises an amortising $40-million project finance facility and $10-million of working capital, both of which mature in March 2014.

ITo secure the loans, Quadra has agreed to hedge 43-million pounds of copper from Franke at a minimum price of $1,75/lb over 2009 and 2010.

When the acquisition agreement was reached between Centenario and Quadra, the firms originally contemplated a restructured project debt facility of $75-million, Quadra CEO Paul Blythe said on Friday.

“We have not been able, in the present debt market, to arrange a facility of this magnitude.”

However, “the transaction at this debt level is still accretive to Quadra and enables us to continue our corporate growth strategy,” he said.

EQUITY OFFERING

Quadra also announced on Friday it will sell 16,2-million shares to raise C$75,33-million.

The firm will use the proceeds of the offering to refinance Centenario's project debt, and to fund the completion of the Franke project, including making payments owed to project contractors.

Quadra has entered into a bought deal agreement with a syndicate of underwriters led by Macquarie Capital Markets, which will buy the shares at C$4,65 apiece.

The company will also grant an overallotment option, for the underwriters to buy another 2,43-million shares.

Quadra plans to file a preliminary short form prospectus on March 26, and the offering is expected to close on or about April 16, the firm said.

“The bank financing, combined with the C$75-million bought-deal equity financing earlier today, enables Quadra to have in place the funding required for the completion and ramp-up of the Centenario project,” Blythe said.

Quadra operates two copper mines in the US - the Carlota operation in Arizona, where it started production in December last year, and the Robinson mine, in Nevada, which it bought from BHP Billiton and restarted in 2004.

The 70-million pounds a year Franke sulphur-extraction/electrowinning heap-leach project is “essentially mechanically completed”, Blythe said earlier this month.

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