4 October 2008
EQUINOX Minerals Limited has announced it has secured a new loan facility of about US$80m for completion of its Lumwana project in Solwezi.
Equinox president and chief executive officer, Craig Williams said in a press statement that the loan would enable the company meet additional working capital requirements that resulted from the delayed startup.
"Equinox is pleased to announce the signing of a new US$80 million loan facility underwritten by Standard Bank Plc and Standard Chartered Bank to be provided by certain members of the existing Lumwana copper project banking syndicate," Mr Williams said.
The loan facililty comes after an electrical fire at the mine caused damage to the 20MVA transformer and and adjacent 11KV substation in July subsequently delaying the commissioning and commencement of copper concentrate production.
"The new loan facility is evidence of the strong confidence our banking syndicate has in the project.
"Along with confirmation of receipt of our incident insurance indemnity, Equinox and its shareholders can now be afforded, during this unprecedented period of market volatility, the necessary levels of stability and liquidity required to expeditiously move the project into copper concentrate production and deliver further shareholder value," he said.
He said the new loan facility was structured on similar terms with the commercial tranche of the US$583.8 million project finance debt facilities announced on December 1, 2006.
"Equinox believes it is prudent and advantageous to establish the additional debt finance facility at this time.
"The company has also successfully renegotiated the repayment schedule to commence at the end of the third quarter of 2009 with respect to some elements of the US$583.8 million facilities reflecting the revised project startup timetable," he said.
He said Equinox considered the establishment of the new loan preferable to drawing down its existing US$45 million contingent funding facility, thereby ensuring that Equinox maintained the appropriate levels of liquidity while limiting shareholder dilution.
The company also reported that rectification works at Lumwana remained on schedule for a December 2008 commissioning with all replacement equipment now available on site for installation and remediation.
Mr Williams said insurance enquiries had been concluded with the project insurance syndicate accepting indemnity for the incident and the company quantifying its losses for submission to the insurers.
He said Equinox had continued to receive liquidated damages from its EPC contractor, a joint venture between Ausenco Projects Limited and Bateman International Projects BV, a subsidiary of Bateman Engineering NV.
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