The company has reached an agreement in principle for a $15 million secured loan
to finance a stripping program at its Grum orebody. The loan is being provided by
its largest shareholder, Cominco, which holds a 27.7% common equity interest in
the company. Finalization of the loan is subject to a due diligence review,
completion of documentation and regulatory approval. Anvil Range and its major
shareholders are also discussing the possibility of up to $5 million of additional
financing on the same terms.
The loan would be fully secured by all of the assets of the company and would
carry an interest rate of 8.5%, with final repayment to be made by October 17
2001, or earlier at the option of Cominco if Anvil Range raises in excess of $20
million in new equity. Cominco has agreed to release its security over current
inventories and accounts receivable to support a working capital line of credit. In
conjunction with the loan, the company would also issue five million warrants to
Cominco exercisable at $3 per share, for a term of the earlier of three years or 1.5
years after final repayment of the loan.
The stripping program is necessary to prepare the mine for the resumption of full
scale operations and will take between three and four months to complete. The
next stage requires the lowering of operating costs, including productivity
improvements and a reduction of electricity costs of $3 million annually. The
company will seek to raise between $20 and $30 million in new equity to finance
additional capital equipment and provide working capital, either by way of a rights
offering, public offering or private placement.
Cominco has confirmed that, subject to market conditions, it will participate in its
pro-rata share in any such equity issue. If these efforts are successful, the
company hopes to resume full scale production this fall.
With the strengthening of zinc prices, the market outlook has improved
significantly. Anvil Range is pleased to have made these arrangements which,
when completed, will enable the company to start the process of getting back into
full production. |
