17th Apr 2007 07:00
Albidon Limited17 April 2007 Level 1 62 Colin St West Perth 6005ALBIDON LTD Western Australia ARBN 107 288 755 Tel: +61 8 9211 4600 Fax: +61 8 9211 4699 Email: [email protected] ASX Code: ALB AIM Code: ALD OFFTAKE FINANCING COMPLETED WITH JINCHUAN GROUP FOR MUNALI NICKEL PROJECT HIGHLIGHTS • Financing agreements have been signed by Albidon and Jinchuan Groupthat provide US$25 million in funding as part of the offtake arrangements forthe Munali Nickel Project in Zambia. • The financing to be provided by Jinchuan comprises a US$20 millionsubordinated debt facility and a US$5 million equity investment. • Signing of these agreements completes the formal documentationrequired for the offtake contract and offtake financing arrangements, previouslyannounced to the market in December 2006. • The agreement with Jinchuan establishes a relationship with thelargest nickel group in the rapidly expanding Chinese market. • Albidon and Jinchuan are currently evaluating a number of proposals tooptimize the implementation of the Munali Nickel Project. Munali Nickel Project The Munali Nickel Project (100% Albidon) is located approximately 60 kilometressouth of Zambia's capital city Lusaka. The Munali Project area comprises theEnterprise Deposit and a number of other nickel prospects in the MunaliIntrusion, the most advanced of which is the Voyager prospect along strike tothe north of Enterprise. A positive Bankable Feasibility Study was completed in July 2006 and site workscommenced in September, following receipt of all required approvals. A capitalraising was completed in October to provide US$35 million of equity finance forthe project funding. Discussions regarding senior debt financing are continuingwith the European Investment Bank and Barclays Capital and are expected to beconcluded in the near future. An offtake agreement was signed in December 2006 that provides for the purchaseby Jinchuan of nickel concentrates from Munali over the life of the mine, andcommercial terms were also agreed for a financing package to be completedbetween Albidon and Jinchuan. Formal documentation for the financing has nowbeen finalised and this completes the offtake agreement and offtake financingfor the Munali Project. Offtake Agreement and Offtake Financing The offtake arrangements between Albidon and Jinchuan announced in December 2006comprise several agreements, as follows. A facilitation agreement that provides a framework for the execution of a suiteof documents in relation to: • the purchase by Jinchuan of all nickel concentrate derived from the Munali Project and any expansions of it; • a subordinated project financing facility under which Jinchuan will provide funds totalling US$20 million for development of the Munali Project; and • the subscription by Jinchuan for shares in Albidon with a value of US$5 million. All of these agreements have now been executed and this completes the offtakecontract and offtake financing arrangements for the project. The offtake contract is on an "Ex-Works" basis whereby Jinchuan takes deliveryof concentrate at the project site, thereby considerably reducing the transportand logistic risks to Albidon. The terms agreed for the subordinated debt are attractive and form an importantpart of the Company's strategy to develop a funding package based on an optimalmix of equity financing, senior bank debt and subordinated debt linked to theofftake contract. Jinchuan Group Limited Jinchuan is China's largest producer of nickel, cobalt and platinum group metalsand is a major producer of copper. The Jinchuan Group's current nickelproduction is approximately 100,000 tonnes per annum, with a target to reach150,000tpa by the year 2010. The purchase of high quality concentrates such asthose from Munali is a key part of Jinchuan's strategy to meet this goal. Jinchuan has a long-standing commitment to technological innovation in theconcentration, smelting and refining of nickel, cobalt and platinum group metalproducts. Albidon and Jinchuan are collaborating on the construction of theMunali concentrator to optimise the grade-recovery performance for all metals tothe benefit of both companies. Albidon is pleased to welcome Jinchuan Group as a partner and shareholder, andthe Company looks forward to examining possibilities for collaboration withJinchuan on other metal projects in Africa. If you have any queries please contact the Chief Financial Officer, Nicholas Dayor Managing Director, Dale Rogers on +61 8 9211 4600 or email [email protected]. Albidon's nominated adviser is RFC Corporate Finance Ltd, contact Stephen Allen+61 8 9480 2500. Additional information may also be viewed on Albidon's website atwww.albidon.com This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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