Anvil shares leap on Kinsevere financing, restart
By: Liezel Hill
Published: 10th August 2009
Source:MiningWeekly
TORONTO – Base-metals miner Anvil Mining now hopes to see the first production from its Kinsevere Stage II copper project, in the Democratic Republic of Congo, by the end of 2010, after securing $200-million in funding from commodities trader Trafigura.
The Trafigura funding is expected to cover all the remaining capital requirements for the 60 000 t/yKinsevere Stage II solvent extraction-electrowinning plant, Anvil CEO Bill Turner said on a conference call.
All fabrication and construction works for the 60 000 t/y Kinsevere Stage II solvent extraction-electrowinning plant was halted in November last year, after the company was unable to arrange the cash it needed to continue with the project.
However, Anvil announced on Monday that Trafigura will pay $100-million for 36% of Anvil, in a private placement, and will also extend a $100-million loan facility for the project.
Assuming the company receives the necessary shareholder approvals, and the transaction closes as planned in the fourth quarter of this year, the plant should be in commercial production early in 2011, Turner said.
He laboured the “strategic” nature of the investment by Trafigura, and hinted that the two companies are planning on pursuing future growth opportunities in the DRC.
For now, however, the emphasis is on completing Kinsevere Stage II, Turner emphasised.
Last year, Anvil also put the Stage I Kinsevere operation on care and maintenance, but restarted heavy-media separation in March this year, after copper markets improved.
The firm has two other mines in the DRC, Dikulushi and Mutoshi, still on care and maintenance.
Turner said that about half of the capital required for Kinsevere Stage II, or $195-million, has already been spent.
Anvil has contracted Ausenco, which had originally been contracted for the engineering, procurement, construction and management of the Stage II project, to complete the remaining engineering and design work for the project.
The engineering and design was 80% complete when the project was halted last year, and is scheduled for full completion by October this year.
Pending the completion of the design work, Anvil is also in negotiations with Ausenco on a lump-sum contract for the completion of the project, Turner said.
TRANSACTION DETAILS
Trafigura will subscribe for two tranches of Anvil units, each comprising one share and 0,232 of a share purchase warrant, and priced at C$2,20 apiece.
The first tranche, to raise $32-million, is expected to be completed next week, which the second tranche, to raise $68-million, will require shareholder approval.
A special shareholders meeting will be held in mid-October, Turner said.
If the warrants are all exercised, Trafigura can increase its holding in Anvil to 39%.
On the debt side, Trafigura will provide Anvil with a $100-million five-year loan facility will bear interest at the London Interbank Offered Rate plus 4%, plus the cost of political risk insurance.
The loan agreement includes an obligation for Anvil to put a hedging programme in place, which will likely cover at least the principal and interest repayments and operating costs for the project.
The two companies also plan to enter into an arms-length life-of-mine offtake agreement for the Kinsevere mine, and an agreement regarding the provision of technical services during the construction and commissioning of Kinsevere Stage II.
Finally, once the second equity finance tranche is completed, Trafigura will have the right to nominate three of the seven members of Anvil's board.
Anvil shares jumped 16,4% on Monday, to C$2,77 apiece by 15:59 in Toronto.
The stock rose as high as C$2,93 earlier in the day.
Add to My Watchlist
What is My Watchlist?
