ZCI restructures African Copper debt

Brian Benza
Staff Writer | Wednesday January 20, 2010 00:00

The credit facility would be worth more than $31-million.

African Copper said in a statement that the facility would place its borrowings from ZCI on a more permanent footing.

The two bridging loan facilities would be refinanced by African Copper out of the proceeds of the convertible loan facility and the ZCI $9,9-million share subscription that was completed in May.

In May, ZCI increased its stake in the copper-miner to 82 percent after finalising the share subscription.

African Copper fell a victim to the commodity price crash and went into care and maintenance early last year which was followed by a hotly disputed takeover bid between Natasa Mining and Zambia Copper.

However, the company whose flagship asset is the Mowana mine resumed operations again in August 2010, after it had received funding from mining investment firm, ZCI.

The recapitalisation would help African Copper's operations to grow to their full potential, the company said.

Mowana is likely to advance to steady state nameplate production through the coming quarters, the base-metals miner said in a statement.

The feed grade delivered from the pit from fresh ore exposure had been consistently 20 percent above the forecast feed grade of 1,2 percent copper. Also, the average grade produce is 26 percent copper, which African Copper said was about 12 percent above its forecast.

Bermuda-registered ZCI entered into a binding agreement with African Copper in May last year to provide the company with a financing package worth $22,5-million. Under the agreement, a $10 million bridging loan facility would be provided to African Copper to satisfy all repayment obligations owing to Natasa Mining.

The bridging facility would also assist the miner to make interim payments to its bondholders and key trade creditors in the amount of 50 percent of the total cash amounts being offered to them under the terms of the financing package.

The bridging loan would be made available in two tranches, and would see tranche A making $5-million available immediately for the purpose of repaying indebtedness owing to Natasa, for professional fees and other authorised expenditure.

Tranche A would, from the date of any draw down of monies under Tranche B, bear a 12 percent interest.

Tranche B would see a further $5-million be made available following the execution of compromise agreements with the bondholders and certain large trade creditors. The funds from this tranche would be made available for the purpose of making interim payments to bondholders and certain creditors, and would bear 12 percent interest a year.

The financing package would return some $8,8-million to both bondholders and trade creditors, and would allow bondholders to retain a proportion of their bonds, giving an aggregate cash and bond offer of about $11,3-million.