Photo by: Bloomberg
PERTH (miningweekly.com) – Belgium-based mining and metals group Nyrstar has maintained that it was within its legal rights to defer repayments on a loan to upgrade the Port Pirie smelter, after South Australian Treasurer Rob Lucas threatened the company with legal action.
The redeveloped Port Pirie smelter was opened in January at a cost of A$660-million, and had been financed using a A$291.25-million loan from third-party financiers, to which the South Australian government had underwritten a guarantee.
The first loan repayment of A$37-million was due on May 28; however, Nyrstar has decided to delay this repayment by 18 months, blaming construction delays at the project, as well as cost overruns.
The Treasurer told the state Parliament that Nyrstar had exceeded its forecast ramp-up and operational performance at the redeveloped smelter, with the company previously telling shareholders that earnings of at least A$60-million were expected in the second half of this year, increasing to A$145-million in 2019, and to A$190-million in 2020.
However, Nyrstar noted that the delay in the start of the ramp-up was impacting the realisation of cash flows from the project relative to the timeline contemplated at the time the financing arrangements were finalised in 2014.
As a result, the company has elected to defer the repayment of the loan.
“Nyrstar has not breached any agreements by delaying the payment and is in full compliance with its contractual obligations relating to the financing arrangements,” the company said in a statement on Friday.
Under the redevelopment plan, the 127-year-old smelter was converted into an advanced metals recovery and refining operation with the capacity to produce a range of metals, including some 250 000 t/y of refined lead, 40 000 t/y of zinc in fume, 7 000 t/y of copper, 25-million ounces of silver dore and 100 000 oz of gold.