ballarat financing firms

Ballarat financing firms

Paul Garvey
Tuesday, 3 October 2006

BALLARAT Goldfields expects to have the $120 million in finance required for its revised development strategy in place by the end of the month, following news that Sydney-based investment bank RFC Corporate Finance has signed on to arrange a $100 million delayed draw finance facility.



News of the non-binding term sheet sent Ballarat shares north by almost 15% to 19.5c by the close of trade yesterday, undoing some of the damage done in the wake of the early September announcement of a new development plan for the company's flagship namesake project.

Under the new development plan, Ballarat will produce more gold each year at a lower operating cost when in full production by bypassing the upper gold ore in the system and targeting the richer, more consistent veins at depth.

However, the revised plan will delay the production out of Ballarat from 2007 to 2008 and has left the company with a $120 million funding hole to fill.

Combined with the company's existing cash reserves, the proposed RFC facility will cover Ballarat's financing requirements.

Ballarat says the term sheet "does not contemplate" Ballarat entering into any hedging arrangements.

Ballarat manager corporate and markets Joel Forwood told MiningNews.net the announcement of the RFC arrangement gave greater clarity to Ballarat's earlier statements that it was in advanced discussions over the financing requirements.

"We've now shown that, while we said we were in advanced discussions, we have got something real in place," he said.

Forwood said the financing was likely to be wrapped up by the end of this month.

Meanwhile, London-based broking house Numis Securities said in a research note released overnight it was disappointed with the lack of gold production from Ballarat to date, and would review its valuation of the company as the new development plans progressed.

"Management misjudged the presence of gold in the higher workings and have now set a more ambitious target for gold production in 2008 from the lower levels," Numis said.

"Extremely difficult ground conditions prevail making development progress slow and expensive. Investors will have to wait until 2008 to find out if management can realise their new production plan.

"We will review our forecasts and valuation in light of these developments."

Shares in Ballarat were unchanged in morning trade today.

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Mining and Exploration conference, to be held at the Hilton Hotel in Sydney
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