Carpathian Obtains Up to US$97 Million for the Construction of the RDM Gold Mine, Brazil
05 Oktober 2011 - 3:18PM
Marketwired
Carpathian Gold Inc. (TSX:CPN)(the "Corporation" or "Carpathian")
is pleased to announce that its Board of Directors has approved the
execution by the Corporation of a committed underwriting with
Macquarie Bank Limited ("Macquarie Bank") for a Project Loan
Facility ("Facility") ranging from US$75 to US$97million and
associated currency and commodity price protection facilities to
fund the construction and development of the Corporation's Riacho
dos Machados Gold Project (the "Project") in Brazil.
Mineracao Richao dos Machados Ltda. ("MRDM"), a wholly owned
Brazilian subsidiary of the Corporation, will be the borrower under
the Facility. The Corporation will act as guarantor of the Facility
until Project completion. MRDM will enter into a combination of
currency price protection to de-risk exposure to both capital and
operating costs, and commodity price protection with respect to
approximately 26% of the proven plus probable reserves, in order to
provide down side price protection for repayment of the loan. The
size and structure of these facilities will be determined in the
context of the market prior to documentation and closing of the
Facility. The Facility is to be provided in two tranches and has a
5-year term carrying an interest rate of LIBOR plus 5.0% to 5.5%
prior to Project completion and then 4.5% to 5.0% following Project
completion. The Facility can be repaid at any time prior to the
expiry of the term subject to only to standard interest rate break
costs.
The Corporation has the option to increase the maximum amount of
the Facility from US$75 million to up to US$97 million, subject to
then prevailing commodity and currency price levels. Should the
Corporation draw on the additional US$22 million it will issue to
Macquarie Bank three year warrants of the Corporation at an
exercise price equal to a 30% premium to the ten day VWAP, subject
to a minimum exercise price of $0.65 (representing a total of
approximately 16.5 million shares) and a maximum price of $0.95 per
share (representing a total of approximately 11.6 million
shares).
Dino Titaro, President and CEO commented "This Facility
represents a significant milestone for the development of the
Riacho dos Machados Gold Project, especially in these uncertain and
challenging times where debt facilities are generally difficult to
obtain. We are delighted with the firm committed underwriting by
Macquarie Bank following their detailed due diligence on the
Project".
Draw down on the Facility will occur upon satisfaction of
various conditions precedent, including detailed Facility and
Security documentation.
While the Facility documentation is being completed the
Corporation is continuing to advance the Project from its current
cash treasury. As outlined in the Corporation's press release dated
September 16, 2011, the Ad Referendum for the Licenca Instalacao
has been received, thereby enabling it to proceed with the overall
construction of the Project. Additionally, the Corporation has
announced that it has selected Caterpillar ("CAT") equipment for
its mining fleet. The initial order of mining equipment has been
signed and it is anticipated that the equipment deliveries to the
Project will commence in the second quarter of 2012. A contract
mining group has been selected to commence the pre-stripping of the
deposit prior to the arrival of the CAT equipment. The secondary
and tertiary crushers, and the ball mill and ancillary grinding
equipment, have been purchased, based on a processing capacity of
9,000 tpd, and are scheduled to be shipped to the Project site this
fall. The Project currently calls for a 7,000 tpd milling
operation.
In order to meet its previously announced time line of targeting
the commencement of gold production by the end of 2012/early 2013,
the Corporation has initiated the building of the starter tailing
dam and the engineering and permitting of the power upgrade
transmission line. Optimization and enhancing of the mining
schedule, gold throughput and gold recovery are nearing completion.
All key senior management personnel for the Project have also been
hired.
Background Highlights of the RDM Feasibility Study
-- Proven and probable open-pit reserves of 20.9 million tonnes at 1.24 g/t
Au for 830,200 ounces of gold (based on a US$950 per ounce gold pit-
shell).
-- Initial 8-year mine life at a mill throughput of approximately 7,000
tonnes per day utilizing conventional open-pit mining and crushing-
grinding with CIL recovery of gold.
-- Average annual recoverable gold production of 93,400 ounces (100,000
ounces/year in the first three years of operation).
-- Average cash operating cost over the life of mine of US$558 per ounce.
-- After-tax project NPV of US$205 million based on a 5% discount rate at
US$1,450 per ounce with an IRR of 31.6%.
-- Estimated start-up capital of US$160 million as of April 1, 2011 (the
Corporation has spent approximately US$15 million on the Project since
the Feasibility Study and currently has allocated an additional US$35
million from its treasury for the Project).
-- Global measured plus indicated mineral resource of 936,600 ounces
(inclusive of mineral reserves) with another 587,300 ounces in the
inferred category.
-- Additional opportunities for future conversion of resources to reserves
and resource growth, reduction in capital and increased mill feed grade.
About Carpathian
The Corporation is an exploration and development company whose
primary business interest is developing near-term gold production
on its 100% owned Riacho dos Machados Gold Project in Brazil, which
is currently focusing on activities surrounding construction, along
with progressing its exploration and development plans on its 100%
owned Rovina Valley Au-Cu Project located in Romania. On a company
wide basis, the Corporation currently hosts NI 43-101 resources of
4.0 million ounces of gold in the measured plus indicated
categories and 4.5 million ounces of gold in the inferred category,
as well as 759.1 million pounds of copper in the measured plus
indicated category and 663.1 million pounds of copper in the
inferred category.
The Riacho dos Machados Gold Project is targeted to produce in
the order of +/-100,000 ounces of gold per annum, with an
anticipated goal for the commencement of production in late 2012 or
early 2013. The Rovina Valley Project in Romaniawill enhance the
Corporations growth profile as a mid-tier gold producer.
Mr. Titaro is the qualified person (as defined in National
Instrument 43-101) overseeing the design and implementation of the
present work programs. He is responsible for preparing the
technical information contained in this news release.
Forward-Looking Statements: This press release includes certain
statements that may be deemed "forward-looking statements".
Forward-looking statements are frequently characterized by words
such as "plan", "expect", "Project", "intend", "believe",
"anticipate", "estimate", and other similar words, or statements
that certain events or conditions "may" or "will" occur. All
statements in this release, other than statements of historical
facts, that address future exploration drilling, exploration
activities and events or developments that the Corporation expects,
are forward-looking statements. Although the Corporation believes
the expectations expressed in such forward-looking statements are
based on reasonable assumptions, such statements are not guarantees
of future performance and actual results or developments may differ
materially from those in forward-looking statements. Factors that
could cause actual results to differ materially from those in
forward-looking statements include market prices, exploitation and
exploration successes, continued availability of capital and
financing, and general economic, market or business conditions.
There can be no assurance that forward-looking statements will
prove to be accurate, as results and future events could differ
materially from those anticipated statements. The Corporation
undertakes no obligation to update forward-looking statements if
circumstances or management's estimates or opinions should change.
The reader is cautioned not to place undue reliance on
forward-looking statements.
The TSX does not accept responsibility for the adequacy or
accuracy of this news release.
Contacts: Carpathian Gold Inc. Mike O'Brien or Shobana Thaya
(Investor Relations) +1(416) 368-7744 +1(416) 363-3883
(FAX)info@carpathiangold.comwww.carpathiangold.com Paradox Investor
Relations Montreal +1(514) 341-0408 or 1-866-460-0408 +1(514)
341-1527 (FAX)info@paradox-pr.ca Seton Services, UK Toni Vallen +44
207 224 8468toni@setonservices.co.uk