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Mirabela secures financing, signs offtake agreement

Kristie Batten
Thursday, 10 July 2008

BRAZIL-focused Mirabela Nickel has announced it has signed an offtake agreement with Votorantim Metais Niquel and entered into a $US80 million ($A83.7 million) bridge financing facility with Barclays and Credit Suisse.

Both deals relate to Mirabela’s Santa Rita nickel project in Brazil.

Barclays and Credit Suisse have also agreed to underwrite a $US280 million ($A293 million) term loan facility, subject to standard conditions including syndication.

Drawdown under the $US280 million is expected to take place before the end of year, when the $US80 bridge facility will be repaid.

The banks will be issued 1.5 million options priced at $A7.22 to be split between them and are exercisable from three years after the options vest.

Mirabela managing director Nick Poll said the financing would fund ongoing construction at Santa Rita.

“Whilst general credit market conditions have weakened over the last year, interest in financing the Santa Rita project has remained strong,” he said.

“This reflects the low capital and operating cost structure of the Santa Rita project compared with other new nickel projects.”

Mirabela has also entered into a five-year offtake agreement with Latin American company Votorantim Metais Níquel, under which Votorantim will purchase 50% of the nickel concentrate produced at Santa Rita until the end of 2014.

The concentrate will purchased at the mine gate.

Production at Santa Rita is scheduled to begin in mid 2009 at an initial capacity of 18,500 tonnes per annum, increasing to 25,000tpa within the first year of production.

Under the agreement, Votorantim will provide Mirabela with a prepayment facility of $US50 million ($A52 million), which will be subordinated to the $US280 million bank debt facility.

“The agreement with Votorantim meets our expectations of net payments for nickel and various credits, whilst delivery at the mine gate is convenient for Mirabela and reduces our working capital requirements,” Poll said.

“The market for nickel sulphide concentrate remains strong and we are in advanced negotiations in respect of the remaining 50 percent.”

The concentrates will be smelted at Votorantim’s Fortaleza de Minas plant in the Brazilian state of Minas Gerais.

Santa Rita is the largest nickel sulphide resource ever discovered in South America and is the largest greenfields nickel sulphide discovery made anywhere in the world in the past 12 years.

The project has a proven and probable reserve of 84 million tonnes grading 0.61% nickel, some 508,000 tonnes of contained nickel, though recent drilling has shown potential for the resource to grow.

The mine will initially be an open pit, though the company announced drilling results in late June that suggested the possibility of a future underground operation.

The project will have a throughput rate of 4.6Mtpa and mine construction is 30% complete and on schedule.

Shares in Mirabela were last trading 8c up to $5.38 on the Australian Securities Exchange.