Coro arranges $15-million (U.S.) of debt financing

Sep 3, 2014

CORO ANNOUNCES DEBT FINANCING AND ACQUISITION OF PROCESSING PLANT FOR DEVELOPMENT OF THE BERTA PROJECT

Coro Mining Corp.’s subsidiary, SCM Berta SA (SCMB), and Inmobiliaria y Constructora Fundart Ltda., a local construction group, have executed a memorandum of understanding (MOU) which provides $15-million (U.S.) of debt financing for the development of the Berta copper leach project, located approximately 20 kilometres west of the village of Inca de Oro, in the III Region of Chile. SCMB has also agreed to acquire the Nora SXEW processing plant, located four km north of the town of Diego de Almagro and 42 km north of Berta, from a local company in administration, for 2.5 billion Chilean pesos (approximately $4.5-million (U.S.)).

Alan Stephens, president and chief executive officer of Coro, commented: “We are delighted that SCMB has obtained this debt facility and is acquiring the Nora plant on favourable terms. Successful completion of the development of Berta and expansion of Nora will result in Coro achieving its founding corporate objective of becoming a producing mining company. We look forward to completing the acquisition of the Nora plant and the finalization of the loan documentation in October and to initiating the ramp-up of copper cathode production in early 2015.”

Background

SCM Berta has been in discussions with the owners of a third party SXEW plant with a view to selling pregnant leach solution (PLS) to them. The opportunity recently arose to purchase the existing Nora SXEW plant at a good price from a company in administration and so enable SCM Berta to produce copper cathode directly without being tied to a third party for PLS treatment or water supply. SCMB intends to expand the SXEW circuit of the Nora plant from 3,000-tonne-per-year 5,000 tpy copper cathode and install a crushing circuit and leach pads at Berta. Longer term, the establishment of leach pads at Berta and Nora will provide the scalability for SCMB to identify additional leachable resources within trucking distance of both and thereby extend the life of the operation or expand it. No modification will be required to the existing environmental impact declaration for Berta which is anticipated to be granted shortly, and the Nora plant is fully permitted.

Debt financing and plant purchase

The Nora plant purchase was secured by a bank guarantee of 5 per cent of the purchase price paid on Aug. 29, 2014, with the balance payable on or before Oct. 22, 2014.

The debt financing, which totals $15-million (U.S.), will be structured as follows:

Nora plant purchase and expansion: $6.25-million (U.S.) fixed fee build-operate-transfer (BOT) contract to cover the purchase price and the expansion from 3,000 tpy to 5,000 tpy copper cathode of the SXEW circuit;
Berta crushing circuit and pads construction: $7-million (U.S.) fixed fee BOT contract to cover the installation of a one million tpy crusher and agglomerator, heap and dump leach pads, and associated piping, ponds, electrics and infrastructure;
A project loan: $1.75-million (U.S.);
The $15-million (U.S.) debt facility will be repayable over a period of five years commencing with the production of first cathode, with a one-year grace period, and will carry interest at 3 per cent over the bank rate charged to Fundart;
The Berta crushing circuit and the Nora plant will be owned and operated by Fundart until the debts have been fully paid, at which time ownership will be transferred to SCMB. Fundart will be reimbursed on a cost plus 10 per cent basis for the provision of labour, spare parts and maintenance during this debt repayment period;
This debt facility is anticipated to provide all of the funds required for the Berta/Nora project to produce 5,000 tpy Cu and is non-recourse to Coro.

Preliminary economic assessment

A preliminary economic assessment (PEA) for the combined Berta/Nora project is being finalized by ProPipe SA, which currently owns 13 per cent of SCMB, and will be released shortly. Completion of this PEA will increase ProPipe’s interest to 18 per cent in SCMB, and successful completion of the debt financing and plant purchase will further increase this to 50 per cent. ProPipe will be operators of SCMB. The PEA is based on the trucking of water from Nora to Berta and PLS to Nora; consideration will be given to permitting and installing a PLS pipeline in the future.

Alan Stephens, FIMMM, president and chief executive officer, of Coro Mining, a geologist with more than 39 years of experience, and a qualified person for the purposes of NI 43-101, is responsible for the contents of this news release.

http://www.coromining.com/s/newsreleases.asp