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Trevali Mining receives first half of $60m debt financing

1st March 2013

By: Henry Lazenby

Creamer Media Deputy Editor: North America

  

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TORONTO (miningweekly.com) – Canada’s zinc-focused Trevali Mining has received in-principle approval from the resource financing division of the FirstRand Group of South Africa, RMB Resources, for the first $30-million tranche of a $60-million senior debt and prepaid precious metals facility.

The debt facility would be used to repay current debt, fund development towards standalone mine and mill operations at the Caribou mill complex, in the Bathurst mining camp of New Brunswick, and for general corporate working capital purposes.

Laurentian Bank Securities research analyst for metals and mining Christopher Chang on Thursday said approval of the $30-million loan should help keep the company’s Caribou mill refurbishment on track for a fourth-quarter startup.

“We estimate approximately $20-million is required to be spent at the Bathurst complex to restart operations using a standalone mill at Caribou.

“While the company still awaits final approval for the full $60-million senior debt facility, the initial closing of the $30-million funding should help partially dispel near-term equity financing concerns by the market,” he said in a note to clients.

This mezzanine tranche of the RMB facility would be repayable before June 30, 2014, or closing of the final $60-million senior debt facility. The facility bears interest of the London interbank lending rate, plus a coupon rate of 8.5% a year.

Trevali also issued purchase warrants at a price of $1.25 a share exercisable at any time through June 30, 2015.

"In addition to the imminent commissioning of our Santander mine in Peru, Trevali aims to maximize its zinc production profile with planned output from Bathurst mining camp operations, and [will look] to benefit from the robust outlook for the commodity in light of the many forecast closures of major zinc producers globally,” Trevali CEO Mark Cruise said.

The remaining portion of the $60-million senior debt facility awaits final approval, which is dependent on the completion of technical studies at Caribou, and expected in April.

Trevali on Friday said construction of its 2 000 t/d Santander zinc/lead/silver mine, in Peru, was advanced in all areas and soft commissioning and testing of various circuits and components was ongoing. Trevali and development partner Glencore International expected commissioning to start late this month, with subsequent ramp-up to commercial production to follow thereafter.

Trevali shares traded at C$1.01 apiece on Friday morning on the TSX.

Edited by Creamer Media Reporter

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