WE DON'T NEED ANOTHER $100M, SAYS CUDECO
Written on the 30 July 2015 by Nick Nichols
CUDECO has dismissed suggestions it will take another $100 million to bring its Rocklands copper project to production, reaffirming that the funding agreement struck with three Chinese cornerstone investors last week is enough.
The company, which was rocked by the departure of founder Wayne McCrae as chairman and director at the behest of the Chinese, has issued a statement aimed at clearing up issues that have dogged the company for some time.
Interim managing director Peter Hutchison, McCrae's long-time right-hand man, says the "unqualified" support of Sinosteel Equipment and Engineering, China Oceanwide International and New Apex Asia Investments has given the Gold Coast-based company the certainty to proceed with its production timetable.
Hutchison says CuDeco has received $3 million in preliminary funding from the cornerstone investors and is expecting a top-up of its finance facility with Minsheng Bank to come through in a matter of weeks.
CuDeco had already drawn down the full amount of $65 million of its Minsheng Bank loan facility and needed the support of Oceanwide and Sinosteel to increase the limit to $100 million.
"With this facility in place, budgeting to date has confirmed that no further funds will be required through to production and positive cashflow," says Hutchison.
He says the cornerstone investors have backed the new executive team at CuDeco following McCrae's departure.
Hutchison also confirmed that the long-awaited commissioning of the production plant will occur this year.
"The processing plant was scheduled to be a two-year build, but there have been a number of intervening factors, particularly the time in choosing the electrical sub-contractor, that have unfortunately led to the recent three-month delay," he says.
Hutchison also confirms that Rocklands is one of the lowest cost mining operations in Australia, with a combined mining and processing cost of just over $17 a tonne.
Although the company originally targeted a 10-year timetable for mining based on the existing plan to process 30 million tonnes of ore over the next decade, CuDeco has also confirmed that expansion and extension of the mine is being considered due to resource upgrades.
CuDeco currently has enough ore stockpiled to begin processing, although the company's finance issues have forced it to scale back mining operations in the interim.
"All efforts are currently focused on completing construction of the processing plant," says Hutchison.
"As components are completed, pre-commissioning activities will commence incrementally, followed by full wet-commissioning trials, the commencement of processing and the eventual production of concentrate product for sale.
"Mining activities will continue at significantly reduced rates until this is completed."
Author: Nick Nichols