mirabela pens deal with russias norilsk

Mirabela pens deal with Russia's Norilsk

September 9, 2008 - 1:15PM

Brazil-focused base metals explorer Mirabela Nickel Ltd has signed a five-year offtake deal with Russian giant Norilsk Nickel.

Norilsk is to buy half the nickel concentrate produced at Mirabela's flagship Santa Rita project in the Brazilian state of Bahia until the end of 2014.

As part of the agreement, Norilsk, the world's largest nickel producer, will provide the Perth-headquartered Mirabela with a $US50 million ($A61.8 million) subordinated loan facility.

Norilsk has an option to convert the subordinated loan to shares in Mirabela at $US8.00 ($A9.91) a share for a maximum of five million shares worth $US40 million ($A49.5 million).

Shares in Mirabela were up nine cents to $4.76 at 1259 AEST.

Mirabela also announced it had completed all nickel and copper hedging required for its senior debt loan arrangements for the Santa Rita project.

The company announced recently a separate, five-year offtake agreement with Brazil's Votorantim, one of the largest private conglomerates in Latin America, for the other 50 per cent of nickel concentrates produced at Santa Rita.

Votorantim has provided Mirabela with a $US50 million ($A61.8 million) subordinated loan as part of that agreement.

"This subordinated debt is an important part of the company's overall project-financing strategy, particularly because it doesn't carry the hedging requirements of the senior debt or the dilution of straight equity," Mirabela said.

Production at Santa Rita - the largest nickel sulfide discovery in the world in the past 12 years - is slated to commence in mid 2009.

Construction of the project is about 60 per cent complete.

http://news.theage.com.au/business/mirabela-pens-deal-with-russias-norilsk-20080909-4coa.html