Curis Resources (TSE:CUV) said Wednesday it has finalized a definitive agreement for a $40 million senior secured loan facility
and copper-off take deal with RK Mine Finance Trust (Red Kite).
the terms of the loan, Red Kite will provide a US$40 million loan with
interest payable at Libor plus eight percent, maturing two years from
the date of closing.
The loan will be repayable without penalty
at any time prior to maturity, Curis said, with the company having a
one-time option to extend the maturity date by one year under specified
terms and conditions.
The funds from the loan will be used to
advance the development of the phase 1 production test facility and
related engineering, infrastructure, as well as permitting-related
activities of the Florence copper project located in Central Arizona.
parties had previously contemplated that Red Kite would have the right
to convert the outstanding amount of the loan into common shares of
Curis at the time prior to maturity under specified terms, but that
conversion right has been removed from the final definitive terms agreed
between the parties, the company said.
In addition to the loan,
Curis will supply Red Kite with 25 percent, or if the extension option
is exercised, 30 percent of the Florence project's copper cathode
production for the life of the mine once it reaches commercial
The off-take agreement will be structured at market pricing, Curis added.
Both the loan and the off-take deal are subject to definitive agreements.
finalization of this agreement with Red Kite is a key milestone toward
delivering on the development of this world class next generation copper
project with no dilution to shareholders," said Curis president and CEO
"The agreement allows us to focus on the
company's key near-term objectives of completing project permitting,
engineering and the start of construction of the phase 1 production test
"A significant percentage of the US$40million will be
invested locally in Arizona and will provide the opportunity for new
jobs, and further reinforces Florence Copper's positive impact on the
In February, Curis unveiled preliminary results
from lab test work done on metallurgical samples taken from a summer
2011 drilling program at the company's Florence project.
The company started metallurgical testing in June of last year to confirm and improve on historical copper recovery estimates.
roll testing was done on 16 initial samples from the 2011 drilling,
with results comparing "favourably" to work completed by BHP Copper in
the mid 1990s, Curis said.
The released results from the bottle
roll tests, as well as four laboratory-scale in-situ copper recovery
tests, with 12 in-situ tests still ongoing and expected to be completed
in the second quarter.
The project hosts a measured and indicated
copper oxide resource of 354 million tonnes grading 0.34 percent copper
for an in-situ resource of 2.62 billion pounds of copper. The deposit’s
characteristics are amenable to in-situ recovery mining, which is
appealing for minimum surface disturbance and lower capital and
Commercial production is expected by 2014.
Initial capital costs are seen at $280 million for the project, with
cash costs (including royalties) of $0.89 per pound of copper for an 80
million pound per year project.
Initial copper production is
forecast for mid-2012, and the project is expected to produce around 76
to 84 million pounds of copper annually when in full operation,
currently seen by 2014.
Curis shares were up 1.54 percent early Wednesday afternoon, trading at 66 cents.