PERTH (miningweekly.com) – Copper miner Hillgrove Resources has restructured its financing agreements for the Kanmantoo project with Macquarie Bank and Barclays Capital.

The company said on Monday that the financing arrangements had been restructured to better match cash flow projections in the new life-of-mine plan, and had been planned by the company and its lending banks following the new life-of-mine plan and the continued ramp-up and operations of the copper mine and its processing operations.

Included in the new agreements is the removal of Kanmantoo’s completion test, allowing the project to make quarterly distributions to the parent company, starting in the third quarter of this year, on the basis of a cash sweep mechanism, subject to cost and performance targets.

The A$10-million mezzanine facility with Macquarie Bank would be repaid by July 2015, a deferral of two years from the previous arrangement, while some 50-million options, at a strike price of A$0.135 would be issued to Macquarie Bank. These options would replace the previous 27.7-million options issued at 27c each.

“This is a very positive development for the company and shareholders, as the updated agreements remove the previous conditions of the bank completion test and puts in place more flexible financing arrangements, better suited to the Kanmantoo project and the parent company needs,” said Hillgrove MD Greg Hall.

He noted that the sufficient early cash flows generated from the new life-of-mine plan would provide sufficient cash to enable the project loan facility, gold loan and mezzanine facility to be paid down before the end of 2015.

“Importantly, the updated agreements allow Hillgrove, as the corporate parent, quarterly access to the free cash flows generated from Kanmantoo, based on agreed production and cost metrics,” said Hall.

“With the new primary crusher operating, and the main Kavanagh pit advanced to near planned depth, the Kanmantoo operation is already seeing a lift to these required steady-state performance levels.