Here is the release on the financing!ÿ
Attention Business Editors:
KASESE COBALT LOAN FINANCING SIGNED
Trading Symbol: BFF TORONTO, July 18 /CNW/ - The board of Banff Resources Ltd.
is pleased to advise that its 55% owned subsidiary, Kasese Cobalt Company Limited (KCCL),
has signed loan finance for approximately US$66 million with five
international financial institutions to fund the construction of the Kasese
Cobalt Project. In addition, US$44 million in equity funding from existing and
incoming shareholders of the KCCL has been organized.
The debt and equity funding for the Kasese Project will be provided as
set out below:
The Royal Bank of Scotland have arranged a guarantee facility for the ElB
loan. An additional US$1.6 million in financing is available from Standard
Bank if required. The US$66 million loan finance will be available for draw down once the
conditions precedent have been satisfied, which is scheduled during the third
quarter of this year. Banff has already advanced to KCCL approximately US$10.6 million as debt
which will be converted to equity and invested US$2.1 million as equity.
Banff's remaining equity requirement in KCCL of approximately US$12 million is
available from its major shareholder, LaSource SAS (LaSource), which owns a
fully diluted 74% interest in the Company.
Project Engineering
Bateman of South Africa has been appointed the EPCM (engineering,
procurement, construction and management) contractor for the Kasese cobalt
processing plant. The plant has been designed in three sections by
internationally recognized leaders in their field, namely:
Signet of Australia bioleaching
Krebs of France solvent extraction
Bateman of South Africa electrowinning
The 10.5 mega watt hydro electric power plant, which will provide
electricity to the project at about US$0.02 per unit, has been designed by
Marcon of South Africa, which has also been appointed EPCM contractor for the
power plant.
The two EPCM contractors will be on site at Kasese in August and it is
anticipated that ground will be broken in September. The construction period
is scheduled to be 15 months with the first saleable cobalt cathode being
produced late in the fourth quarter of 1998.
During the first full year of operations it is planned to produce 600
tonnes of cobalt cathode, rising to 1,000 tonnes of 99.8% high quality cobalt
cathode in the second year. The plant has the production potential of 1,200
tonnes per annum.
The concentrate stockpile that is situated adjacent to the process plant
site contains approximately 990,000 tonnes grading 1.38% cobalt. At the
projected recovery rate of above 90%, production will average 1,000 tonnes per
annum of high quality cobalt for 10 years at an average cash operating cost
before financing of less than US$4.00 per lb. Management believes that these
costs are unlikely to escalate significantly over time as the project has its
own hydro generation station.
The Cobalt Market
-----------------
Demand for cobalt is increasing at a rate of about 4% or 1,000 tonnes per
annum. The latest Metal Bulletin price for 99.8% cobalt was reported as
US$22.00-$23.50 per lb. This has the potential to reduce when large cobalt
by-product productions such as from Voisey's Bay come on stream in the early
years of the next century. The political situation in the Democratic Republic
of Congo (Zaire) remains uncertain and this will make it difficult to secure
the capital commitments that will be required for development in this area,
which historically has been a major cobalt producer. Accordingly, Banff sees a
price window of opportunity of 3 to 4 years after the start of operations
during which it is anticipated KCCL will be able to rapidly reduce its US$66
million debt, after which it will have an extraordinary low cost base of $4
per lb plus minimal sustaining capital.
The Project Team
----------------
The key project team leaders at KCCL are taking up residency at Kasese.
They include John Aird, the Project Manager, who is a chemical engineer with
23 years experience in the Zambian copper belt including being manager of the
Chambishi Division of ZCCM during construction and operation of a 2,500 tonnes
per annum cobalt plant. He was also manager of the Nkana Division which had a
cobalt production capacity of 6,000 tonnes per annum. Mr. Aird will be
assisted by Philip Ray as Construction Manager and KCCL's interface with the
EPCM contractors. Mr. Ray has over 28 years experience in the construction and
contracting industry and was construction manager on the Chambishi cobalt
plant. The chief metallurgist, who will be on site during the construction
phase, is Pierre Ollivier. Mr. Ollivier has been with BRGM, a 40% shareholder
in LaSource, for over 25 years most recently as Head of Hydrometallurgical
Services. He has worked on the Kasese Project since its inception, including
all the areas of process technology from laboratory and bench scale testing in
France in the early 1990's, pilot plant testing in Kasese in 1994 and
confirmation pilot plant testing at the Gencor laboratories in Johannesburg
1995. Mr. Ollivier has lived the metallurgy of this project since 1990.
Kilembe Mine
------------
In parallel with the successful completion of the KCCL financing Banff
has continued to study the economic viability of the old Kilembe Mine and its
environs. The Eastern open pit area and most of the underground mine have been
extensively redrilled. While the feasibility study of reopening the mine and
refurbishing the mill and concentrators is not yet finalized, it is unlikely
that further work will be done by Banff to reopen the mine in the foreseeable
future. This is partially because large scale additional reserves were not
identified by Banff's drilling programme and those reserves that do remain are
scattered and would be high cost operations. In addition, the existing mill
and concentrator would have to be essentially rebuilt.
While the results from work done on the old Kilembe Mine itself have been
disappointing, Banff's efforts on redrilling the old Kilembe Mine tailings dam
have been more than satisfactory. Auger drilling on 30 metre centres of the
tailings stocked on the sides of Nyawamba River valley have established 5.158
million tonnes at 0.121% cobalt and 0.181% copper which are probably
treatable. Anglo American Research Laboratories are currently carrying out
metallurgical testwork on the tailings, particularly with respect to crucial
recovery factors. Time Mining of South Africa have been retained to prepare a
feasibility study for mining, concentrating and restockpiling the treated
tailings, subject to acceptable recoveries being achieved. The resultant
concentrates would be similar in grade but somewhat finer in grain size, which
could be metallurgically positive, to the concentrate already stockpiled at
Kasese.
If recoveries are acceptable, the monitoring and concentrating of the
tailings will be relatively inexpensive. The Kilembe tailing concentrates
could conceivably supply the Kasese cobalt plant with approximately four years
of additional feed.
Board and Management
--------------------
To reflect the evolution of Banff to a development company, Banff's
management team has been strengthened by the introduction of Henri Troch as
President and COO. Mr. Troch, who is a metallurgist by training, has spent 19
years in Belgium, Mexico and South America with Sogem Group and Union MiniŠre
and the last three years with Magotteaux in Brazil and Mexico. Mr. Troch will
spend the majority of his time over the next six months in Uganda assisting
with the finalisation of the Kilembe tailings feasibility, which is due to be
completed by October 2, and ensuring the construction of the Kasese plant gets
off to a clean start. Norman Hardie will stand down as Chairman, but will
remain as a non-executive director. Gregory Martyr, who is currently a
director will take over as non-executive Chairman. Charles Main remains as CFO
of Banff.
This has been a very challenging year for the management and shareholders
of Banff, but we all can now look forward to the Company becoming a major
producer of the highest quality cobalt with the first production expected from
the Kasese cobalt plant in late 1998.
Banff Resources Ltd.
Per: Norman D.A. Hardie
Chairman
The Vancouver Stock Exchange has not reviewed and does not accept the
responsibility for the adequacy or accuracy of the content of this News
Release.
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For further information: Gregory Martyr or Charles Main at (416) 596-1299, toll-free 1-800-756-9995, or Henri Troch in France at (33) 2-3864-3667 |
