........package for Tiger Resources
Copper junior Tiger Resources has significantly reduced the cost of its debt and boosted its credibility with a new debt and equity package involving the World Bank's International Finance Corporation (IFC).
Tiger mines for copper in one of the world's most challenging regions, the Democratic Republic of Congo, where debt traditionally doesn't come cheap.
However, the new $US187.7 million ($260 million) debt and equity deal involving the IFC, among others, is set to almost halve the interest costs faced by the miner while also funding improvement work at the company's flagship Kipoi mine.
Tiger had been paying interest rates of 17 per cent for most of 2015 on its existing $US129.7 million debt, which was held by Taurus Funds Management and Gerald Metals.
Those interest rates meant almost 8 per cent of Tiger's revenue from the first six months of 2015 went out the door to service interest.
However, that expensive debt will be fully repaid with a new $US162.5 million debt package from IFC and Taurus, which carries interest rates of 9.25 per cent on a 99-month term.
The debt package will also provide $US32.8 million for debottlenecking work at Kipoi, which should help grow production from 25,000 tonnes per year to 32,000 tonnes annually.
It is the second deal the IFC has completed with an ASX-listed miner within 24 hours.
The IFC also backed Rio Tinto's $US4.4 billion financing of the Oyu Tolgoi copper and gold expansion in Mongolia.
The IFC will become a substantial shareholder in Tiger, through an equity capital raising that is expected to bring in $US25 million from existing shareholders.
Resource Capital Funds, which owns 3.1 per cent of Tiger, has agreed to subscribe for up to $US10 million of extra shares in two tranches, meaning it will also become a substantial shareholder.
Remaining shareholders will be able to subscribe for four new shares for every nine they own at 4.7¢ per share, which compares to the average share price over the past five days of 5.69¢.
Patersons analyst Matthew Trivett said the new debt was good news for shareholders.
"The debt side of this is something they needed, you can't go on paying 17 per cent interest," he said.
However, Mr Trivett was less positive on the equity raising.
"The equity portion is a surprise and hadn't been talked about. Tiger is one of those companies that has tended to spend a bit more than they indicate," he said.
Meanwhile, fellow copper miner OZ Minerals has revealed that its hydromet process has been a success, and has significantly reduced the levels of impurities in the copper concentrate from the company's Prominent Hill mine in South Australia.
OZ said the hydromet process had increased the copper content of one batch up to 60 per cent, while reducing impurities like uranium below "penalisable" levels.
The process has been conducted as part of options planning for OZ's Carrapateena development mine.
OZ shares were 3 per cent higher at $3.92 on Wednesday morning, while copper was fetching $US2.07 per pound.
Read more: www.smh.com.au/business/...-20151215-glnnwu.html#ixzz3uWQTaagP
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