Avoca turns to debt for Higginsville financing Kate Hay/ock -...

Avoca turns to debt for Higginsville financing

Kate Hay/ock - MINING NEWS -
Monday, 17 March 2008

GOLD miner Avoca Resources has turned to a $A71 million debt facility from Societe Generale and BOS International to fully commission the Higginsville gold project after failing to secure toll treatment facilities

Avoca said the facility would replace the revenue the company had failed to secure from a toll treatment and ore sales arrangement.

The Perth-based miner said it had held discussions with several parties over potential toll treatment and ore purchase, but mutually acceptable terms had not been reached.

However, the company was quick to say the new arrangement would be better for shareholders, providing a superior return.

The debt facility will be issued in three tranches – a $25 million revolving line of credit, with an initial term of 30 months from project commissioning, a $43 million non-revolving facility with a six-month amortising repayment schedule, and a $3 million performance bond guarantee.

The facility does not require Avoca to hedge any of its gold output.

The company said it planned to produce 35,000oz up to June 2008, providing revenue stream for the remainder of the year.

The 1 million tonnes per annum Higginsville plant in Western Australia is due for commissioning at the same time.

Avoca will also spend $11 million on exploration this financial year and next year as well.

Shares in the company rose 15c on Friday and closed a further 6c higher to $2.10 this afternoon.