Wednesday, 9 May 2012

Curis Resources finalizes $40 mln loan facility, and copper off-take with Red Kite

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).

Under 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.

The 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 production. 

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.

"The 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 Michael McPhie.

"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 facility.

"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 local economy."

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.

Bottle 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 operational costs.

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.

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