THE BOURSE WHISPERER: Two major shareholders of Finders Resources, Taurus Funds Management and Resource Capital Funds have agreed to provide a loan of up to $8 million to Finders, providing capital for the Wetar copper project in Indonesia.
Finders will put the funds towards deposits and progress payments on Marine Fuel Oil (MFO) generators, the transportation and import of the Whim Creek SX/EW plant from Australia and for general working capital purposes.
Finders has signed a contract for the purchase of six second‐hand refurbished generators from Royce Power Engineering representing a total generating capacity of 19.7MW.
Use of MFO generators was a key component of the Bankable Feasibility Study, which established they offer a significant operating cost saving (around 15 per cent to 20 per cent) compared to high speed diesel due to lower fuel price and greater efficiency.
The Whim Creek SX/EW plant was formerly used at the Whim Creek mine in Western Australia and Girilambone in New South Wales.
The plant has a nameplate capacity of 18,000 tonnes per annum copper cathode and was purchased by Finders from Straits Resources in 2009.
Finders said it also currently arranging a an additional project finance funding package of US$138 million with Credit Suisse, Standard Bank and Barclays.
The banks have received all external consultant reports necessary for their due diligence and are expected to seek credit committee approval in November.
Finders Managing Director Chris Farmer said the financing is a vote of confidence in Finders:
“The MFO generators and the Whim Creek SX‐EW plant are both important parts of our development plan for the Wetar copper project,” Finders Resources managing director Chris Farmer said in the company’s announcement to the Australian Securities Exchange.
“Shipping Whim Creek and securing long lead time equipment such as the MFO generators represent important development milestones.
“Taurus and RCF have been supportive, long term shareholders who recognise the value of the Wetar copper project.
“Their support means we can sustain project development momentum, ahead of the main project funding.”
The principle terms of the loan from Taurus and RCF are as follows:
– facility amount of up to $8 million;
– the facility is unsecured;
– interest rate of eight per cent per annum payable quarterly in arrears and may, subject to agreement between the individual lender and Finders, be paid by way of issue of ordinary shares in Finders at the 5 day VWAP for ordinary shares of Finders on the ASX;
– the facility is repayable on the earlier of either the project equity raising or 24 October 2012;
– if Finders is issuing ordinary shares, the lenders may elect to convert their loan into ordinary shares of Finders at the same issue price per share as the equity raising;
– the lenders are entitled to a facility fee of 1.5per cent of the total facility amount and will be issued warrants over a total of 16 million shares, exercisable at 50c per share at any time in the next three years; and
– Finders is required to use funds raised on the exercise of the warrants to repay any outstanding amounts under the facility.