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Minera IRL confident on Ollachea finance after construction permit comes through

The miner has received an offer of US$100mln in debt finance from current bank Macquarie, while discussions are underway with other parties over the balance.
Minera IRL confident on Ollachea finance after construction permit comes through

Minera IRL (LON:MIRL) has received a construction permit for its Ollachea gold mine in Peru leaving only the financing to be arranged for building work to start.

Estimated construction costs for the mine including general sales tax are US$177mln.

The miner has received an offer of US$100mln in debt finance from current bank Macquarie, while discussions are underway with other parties over the balance.

Options being discussed include a share issue as well as the forward sale of production or a royalty stream, subordinated debt instruments or even the sale of a stake in the project.

Minera added it had declined to take up the Macquarie offer until the rest of the financing has been tied up. Macquarie's offer includes its current facility of US$30mln, the repayment of which has been extended to June 2015.

Courtney Chamberlain, Minera’s executive chairman, said he expected all of the financing to be arranged by the end of September, following which development would start.

"We are delighted to have received approval of the construction permit for Ollachea and are looking forward to commencing development as soon as project financing is arranged, which we expect to conclude during the third quarter of 2014," he said.

The mine is scheduled to produce 930,000 ounces of gold over an initial nine-year mine life at an average site cash operating cost of $507 per ounce of gold produced. The total life- of-mine capital cost is estimated at US$220mln.

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