LIMA, PERU, Jun 08, 2015 (Marketwired via COMTEX) —
Minera IRL Limited (“Minera IRL”, or the “Company”) (IRL)(aim:MIRL)(lma:MIRL), announces that it has arranged a US$70 million
secured finance facility (the “Bridge Loan”) structured by the
Peruvian state-owned development and promotion bank, Corporacion
Financiera de Desarrollo S.A. (“COFIDE”) and syndicated through
Goldman Sachs Bank USA. The Bridge Loan is expected to be the first
step towards a senior project credit finance facility of up to US$240
million, described in a Mandate Letter signed by COFIDE and Minera
IRL (“Senior Project Debt Facility”). The Senior Project Debt
Facility will be structured by COFIDE, in conjunction with Minera
IRL, to build the Company’s Ollachea gold project in the Puno Region,
southern Peru (“Ollachea”, or the “Ollachea Gold Project”). The
Company has agreed to COFIDE’s participation on the Minera IRL board
of directors, subject to the required approvals.
Highlights:
-- The key terms of the Bridge Loan:
-- Interest rate: LIBOR plus 6.17%, payable quarterly in arrears
-- Term: 24 months
-- Structuring and Disbursement Commission of 2.25% along with a
US$300,000 upfront fee, paid on the disbursement of the Bridge Loan
-- The Bridge Loan is expected to be repaid from the follow-on Senior
Project Debt Facility, but is repayable at any point, subject to a
0.75% fee
-- The Company is applying the Bridge Loan funds towards consolidating debt
and will apply net proceeds towards advancing the development of
Ollachea as well as funding a limited resource expansion drilling
campaign. Use of proceeds are expected to include:
-- Repayment of the Macquarie Bank debt facility
-- Final property payment to Rio Tinto
-- Commencing the detailed engineering and design of the Ollachea plant
-- Pre-construction project development work
-- Resource expansion drilling at the Minapampa Far East Zone at
Ollachea
-- Continue its commitment to social and environmental programs
-- Financing and advisory expenses
-- General corporate expenses and working capital
-- The Company has signed a Mandate Letter with COFIDE to structure a
Senior Project Debt Facility for up to US$240 million which includes
retirement of the Bridge Loan.
-- Minera IRL expects to seek equity participants to reduce the amount of
debt and leverage on the project to what the Company determines to be an
acceptable level, and will include input from COFIDE and potential debt
and equity providers.
-- It is expected that one or more financial institutions will be invited
to participate in the Senior Project Debt Facility.
-- Although there can be no guarantee on the timing and terms, it is the
intent of COFIDE and Minera IRL to have the Senior Project Debt Facility
in place prior to the end of 2015.
-- The Bridge Loan is secured by the Ollachea Gold Project's assets, mining
reserves, mining concessions and rights, guarantees from Minera IRL
S.A., and a pledge of the shares of the Company's subsidiary Compania
Minera Kuri Kullu S.A., which owns 100% of the Ollachea Gold Project.
-- Specifics of the Macquarie debt repayment and Rio Tinto property payment
include:
-- Repayment of US$30 million Macquarie Bank debt facility (plus
accrued interest) and release of associated security.
-- Payment of US$12.9 million of the US$15.1 million outstanding to Rio
Tinto, under the Ollachea Mining Rights Transfer Contract, and
release of associated security. The remaining US$2.2 million
outstanding has been be converted into an unsecured promissory note,
accruing interest at a rate of 7% per annum, payable by 31 December
2015, either in cash or ordinary shares of Minera IRL, at the
discretion of the Company (the "Agreement Regarding Payment").
Transaction Considerations
In addition to the Structuring and Disbursement commissions outlined
above, Minera IRL has committed payments totalling US$2.6 million for
services relating to legal assessment, technical and financial
advisory. Likewise, the Company has granted 11.6 million options
(exercisable for a year following the commencement of commercial
production from the Ollachea Gold Project at an exercise price of
C$0.20) and a 0.9% net smelter return over the Ollachea Gold Project.
The Company has a right of first refusal on the sale of the royalty
and can repurchase the royalty, at its option, up until the date that
Minera announces final commissioning of the project.
Related Party Transaction
Under the AIM Rules, Rio Tinto is deemed to be a related party of
Minera IRL due to its substantial shareholdings in the Company. As
such, the Agreement Regarding Payment is deemed to be a related party
transaction under the AIM Rules. The directors of Minera IRL
consider, having consulted with the Company’s Nominated Adviser,
Canaccord Genuity Limited, that the terms of the Agreement Regarding
Payment is fair and reasonable insofar as shareholders are concerned.
Commenting on the Ollachea financing package, Daryl Hodges, Minera
IRL’s Executive Chairman, stated, “This transaction is an important
first step for Minera IRL and is the culmination of efforts of the
Minera IRL team, working closely with COFIDE and its advisors. Minera
IRL can now focus on taking final steps toward financing its flagship
project to production. With support from COFIDE, the Company is in a
much better position to arrange financing for Ollachea, build the
project, deliver on its commitments to the local community to create
jobs, wealth for the benefit of the region, and create new
opportunity for its shareholders. We cannot neglect to mention that
this was the dream of Courtney Chamberlain, whose untimely passing
was felt by all.”
Dr. Diego Benavides, Minera IRL’s Interim CEO and Executive President
of Minera IRL S.A., continued, “The financial backing from COFIDE is
the result of over 18 months of discussions, comprehensive project
evaluation, and due diligence by independent consultants. The support
of COFIDE is an endorsement of the technical quality of our Ollachea
Gold Project and its importance to the Ollachea Community and the
Puno region. We now have the opportunity to focus on working with the
Ollachea community, our true long-term partners, in developing an
outstanding modern mining operation providing key economic benefits
to the Puno region and, indeed, to Peru.”
Mr. Jorge Ramos, General Manager of COFIDE, commented, “We are very
pleased to be able to offer this financing package to Minera IRL.
Ollachea represents an economically robust gold project and this is
an excellent opportunity for COFIDE’s first mine project financing.
We have confidence that the Minera IRL team will ensure that the
Ollachea Gold Project will be a great success, which will have
important benefits for the Ollachea community and Peru.”
Mr. Juan Luis Valeriano, President of the Community of Ollachea,
stated, “After eight years of working in partnership with Minera IRL,
indeed sharing a close friendship, we are glad that COFIDE, an
institution of the Peruvian Government, is providing the financing
for the development of the Ollachea mine. The new mine will provide
long-term benefits to our local economy, especially towards job
creation, social projects, and spin-off business opportunities for
many of our citizens. Ollachea will also be Peru’s first ‘Partner
Community’ with a mining company with the community holding a 5%
shareholding in the project.”
Analyst and Investor Conference Call
Minera IRL plans to host a conference call at 9:00 am Lima time,
10:00 am Toronto time and 3:00 pm London Time on Tuesday, 9 June
2015.
To participate in the conference call, please dial:
Toll Free North America: +1 (877) 223-4471 Toll Free United Kingdom: +44 0 (800) 051-7107 Toll Free Peru: +51 0 (800) 53-840 Toll Free Chile: +56 (123) 0020-9709 Other International Locations: +1 (647) 788-4922
Alive webcast may be accessed at http://www.gowebcasting.com/6573
The webcast will be archived on the Mineral IRL website
(www.minera-irl.com) and a playback of the conference call may be
accessed until 23 June 2015 by dialing:
Toll Free North America: +1 (800) 585-8367 Other International Locations: +1 (416) 621-4642
The passcode to access the playback of the conference call is
63059638#.
The Ollachea Gold Project
The Company’s objective is to bring the Ollachea Gold Project into
production in the second half of 2017 at an initial production rate
of 100,000 ounces of gold per year and at a projected total on site
operating cash cost of under US$600 per ounce.
The Ollachea orogenic gold deposit, located in the Puno Region,
southern Peru, was discovered by Minera IRL in late 2008. Since that
time, the Company has completed more than 81,000 metres of surface
diamond drilling in 208 holes, resulting in the delineation of
significant gold mineral resources and reserves. In November 2012,
the Company completed a Definitive Feasibility Study (“DFS”) on the
Minapampa zone and in early 2013 finished driving a 1.2 kilometre 5 x
5 metre access tunnel from the plant site, located in an adjoining
valley, to the ore deposit. The project has solid support from the
Ollachea Community illustrated and underpinned by the 30-year Surface
Rights Agreement signed in May 2012.
The results of a DFS optimization process were announced by the
Company in its press release dated 4 June 2014. These studies further
optimized the robust underground mining operation with Probable
Mineral Reserves of 9.2 million tonnes grading 3.4 grams of gold per
tonne (“g/t Au”), at a cut-off grade of 2.0 g/t Au, and containing
1.0 million ounces. The Ollachea mine production schedule shows
930,000 ounces of gold being produced over an initial nine-year mine
life with total cash costs of US$587 per ounce sold and site cash
operating costs of US$509 per ounce produced. The up-front capital
cost is estimated at US$177 million (including US$12 million IGV,
which is recoverable) and the life-of-mine capital cost is estimated
at US$220 million which includes sustaining capital and closure
costs.
The project economics are robust over a range of gold prices and
discount rates, as has been previously reported by the Company.
Significant potential exists to increase mineral resources both along
strike and at depth as evidenced by the results from three
underground holes that stepped out 320 metres along the eastern
strike of the Minapampa deposit. Each hole returned a significant
intersection at a higher grade than the current Minapampa resource
grade (reported in the Company’s press release dated 2 April 2013).
Drilling to better define the resource potential to the east of
Minapampa, a cost effective future production site situated closer to
the proposed treatment plant, is planned to recommence during the
second half of 2015. Recent re-evaluation of existing drill core has
resulted in a fuller understanding of structural controls on economic
gold mineralization in the system. This information has been used to
better focus the targeting of future resource-expansion drilling.
About COFIDE
Corporacion Financiera de Desarrollo S.A. (“COFIDE”) is a Peruvian
state-owned development bank. COFIDE’s charter is to provide
financing to projects of national interest. COFIDE is also actively
involved with several Peruvian community programs which provide
economic, health, social, educational and sustainable large-scale
development.
COFIDE and Minera IRL will consolidate their successful track-record
in social relationships through the implementation of the Rural
Business Development Inclusive Program (“PRIDER”) designed by COFIDE
with the purpose of promoting financial training and business
incorporation towards a more efficient management and the creation of
companies in the Ollachea Community. Additional information on COFIDE
can be found on their Spanish language website, www.cofide.com.pe.
About Minera IRL Limited
Minera IRL Limited is an AIM, TSX and BVL listed precious metals
mining and exploration company with operations in Latin America.
Minera IRL is led by a management team with extensive operating
experience in South America. In Peru, the Company operates the
Corihuarmi Gold Mine, which continues to add cash flow and has
untested potential, and with the financings described in this press
release, is now poised to advance its flagship Ollachea Gold Project
towards production.
For more information, please visit www.minera-irl.com.
No stock exchange, securities commission or other regulatory
authority has approved or disapproved the information contained in
this news release.
Cautionary Statement on Forward-Looking Information
Certain information in this news release, including information about
the Company’s financial or operating performance and other statements
expressing management’s expectations or estimates of future events,
performance and exploration and development programs or plans
constitute “forward-looking statements”. Forward-looking statements
often, but not always, are identified by words such as “seek”,
“believe”, “expect”, “do not expect”, “will”, “will not”, “intend”,
“estimate”, “anticipate”, “plan”, “schedule” and similar expressions
of a conditional or future oriented nature identify forward-looking
statements. Forward-looking statements are, necessarily, based upon a
number of estimates and assumptions. While considered by management
to be reasonable in the context in which they are made,
forward-looking statements are inherently subject to political,
legal, regulatory, business and economic risks and competitive
uncertainties and contingencies.
The Company cautions readers that forward-looking statements involve
known and unknown risks, uncertainties and other factors that may
cause Minera IRL’s actual financial results, future performance and
results of exploration and development programs and plans to be
materially different than those expected or estimated future results,
performance or achievements and that forward-looking statements are
not guarantees of future performance, results or achievements.
Forward-looking statements are made as of the date of this news
release and Minera IRL assumes no obligation, except as may be
required by law, to update or revise them to reflect new events or
circumstances. Risks, uncertainties and contingencies and other
factors that might cause actual performance to differ from
forward-looking statements include, but are not limited to, any
failure to obtain or complete project financing for the Ollachea Gold
Project (including the Senior Debt Facility), changes in the price of
precious metals and commodities, changes in the relative exchange
rates of the US dollar against the Peruvian nuevo sol, interest
rates, legislative, political, social or economic developments both
within the countries in which the Company operates and in general,
contests over title to property, the speculative nature of mineral
exploration and development, operating or technical difficulties in
connection with the Company’s development or exploration programs,
increasing costs as a result of inflation or scarcity of human
resources and input materials or equipment. Known and unknown risks
inherent in the mining business include potential uncertainties
related to the title of mineral claims, the accuracy of mineral
reserve and resource estimates, metallurgical recoveries, capital and
operating costs and the future demand for minerals. For additional
information, please consult the Company’s most recently filed MDA
and Annual Information Form.
Qualified Persons
The preparation of the technical information contained herein was
supervised by A.E. Olson, Consultant, MAusIMM, who is recognized as a
Qualified Person for the purposes of National Instrument 43-101, and
who has reviewed and approved the technical information in this press
release.
The preparation of the technical resource information contained
herein was supervised by Donald McIver, VP Exploration of the
Company, MSc Exploration and Economic Geology, a Fellow of the
Australian Institute of Mining and Metallurgy (FAusIMM), as well as
the Society of Economic Geologists (FSEG), who is recognized as a
Qualified Person for the purposes of National Instrument 43-101, and
who has reviewed and approved the resource information in this press
release.
Non-IFRS Measures
“Site operating cash costs” and “total cash costs” are non-IFRS
measures that do not have a standardized meaning prescribed by GAAP
or IFRS and may not be comparable to other similarly titled measures
of other gold mining companies.
“Site operating cash costs” include costs such as mining, processing
and administration, but are exclusive of royalties, workers’ profit
participation cost, depreciation, amortization, reclamation, capital,
development, exploration and other non-site costs (transport and
refining of metals, and community and environmental).These costs are
then divided by ounces produced to arrive at “site cash operating
costs per ounce”.
“Total cash costs” includes “site operating cash costs” and reflects
the cash operating costs allocated from in-process and dore inventory
associated with ounce of gold in the period, plus applicable
royalties, workers’ profit participation cost, and other non-site
costs (transport and refining of metals, and community and
environmental). These costs are then divided by the ounces sold to
arrive at “total cash costs per ounce sold”.
These measures may vary from one period to another due to operating
efficiencies, waste-to-ore ratios, grade of ore processed and gold
recovery rates in the period.
Management believes this information is useful to investors because
these measures are considered to be key indicators of a company’s
ability to generate operating earnings and cash flow from its mining
operations. These measures are furnished to provide additional
information and are non-GAAP and non-IFRS measures that do not have
any standardized meaning prescribed by GAAP or IFRS. They should not
be considered in isolation as a substitute for measures of
performance prepared in accordance with IFRS, and are not necessarily
indicative of operating costs presented under IFRS.
Contacts: Minera IRL Daryl Hodges Executive Chairman +1 (416) 907-7363 Minera IRL Diego Benavides Interim CEO and President, Minera IRL S.A. + (511) 418-1230 Minera IRL Brad Boland CFO +1 (416) 907-7363 Canaccord-Genuity Limited (Nominated Adviser Broker, London) Henry Fitzgerald-O'Connor Chris Fincken + 44 (0)20 7523 8000 Buchanan (Financial PR, London) Bobby Morse Gordon Poole +44 (0)20 7466 5000
SOURCE: Minera IRL Limited
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