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Friday, 13 September 2013
Minera IRL given more time to pay for Ollachea by Rio
Minera IRL (LON:MIRL) (TSE:IRL) has negotiated more time from Rio Tinto (LON:RIO) to make the final payments on its flagship Ollachea mine in Peru.
Minera acquired the Ollachea gold project from Rio Tinto in 2006. The two miners have agreed a US$21.5mln final payment, which will now be settled in two instalments instead of three with the first payment of US$7.3mln now put back to next January instead of October.
The remaining US$14.2mln will also be met through one final payment due in July 2016. The original agreement would have seen Minera pay the second and third instalments of US$7.1mln in 2014 and 2015.
The new deal still allows Minera to pay 80% of the total in shares.
Courtney Chamberlain, Minera's executive chairman, stated, "We are very pleased to have been able to restructure the payment schedule with Rio Tinto.
"The deferral of the first instalment provides the company with additional financial flexibility over the near-term."
"Furthermore, the payment of the remaining 66% of the principal amount has been deferred until July 2016, which significantly improves our working capital position.
“The deferred payment terms also creates an opportunity for Minera IRL to potentially pay the outstanding amount out of cash flow from the Ollachea Mine, which we plan to bring into production in 2015."
Minera IRL and Rio Tinto agreed the final amount of US$21.5mln based upon the results of the November 2012 feasibility study for Ollachea.
Both instalments accrue interest at a rate of 7% per annum to be paid in cash.