TSX, ASX: AVM
Common Shares outstanding 102 million
All amounts are in U.S. dollars unless otherwise stated.
MONTREAL, Aug. 10 /CNW Telbec/ - Anvil Mining Limited (TSX, ASX: AVM)
("Anvil" or the "Company") and Trafigura Beheer B.V. ("Trafigura") are pleased
to announce that an agreement has been reached for a combined debt and equity
financing arrangement for an aggregate amount of $200 million (the
"Transaction"). The proceeds of the Transaction will be used to recommence
construction of the Kinsevere Stage II 60,000 tonnes of copper per year
Solvent Extraction - Electrowinning ("SX-EW") project located in Katanga
Province in the Democratic Republic of Congo ("DRC") and for general working
capital purposes. The Transaction includes both debt and equity finance with
the equity financing occurring in two tranches. The second tranche of the
equity financing, the debt finance and the additional agreements described
below will be subject to shareholder approval.
On completion of both tranches of the equity component of the
Transaction, assuming current exchange rates and no exercise of outstanding
options, Trafigura will hold approximately 36% of the issued and outstanding
common shares of Anvil, with an opportunity to increase its shareholding to
approximately 39% on a fully-diluted basis, should it exercise the warrants
issued as part of the equity financing.
- Comprehensive strategic alliance with Trafigura - the second largest
independent trader in the non-ferrous market, with annual turnover (as
at September 2008) in excess of $70 billion,
- $200 million funding package from Trafigura for completion of
Kinsevere Stage II Project consisting of a $100 million equity
investment and $100 million fully underwritten debt commitment,
- Provides a fully financed solution for the development of Kinsevere
- Potential for additional funds of approximately C$31.2 million upon
the exercise of warrants, and
- Funding package and technical expertise expected to fast track
Kinsevere Stage II SX-EW into production.
Bill Turner, President and CEO of Anvil commented, "The involvement of
Trafigura as a strategic partner will allow us to rapidly recommence
construction of our flagship Kinsevere Stage II project, a significant
high-grade copper resource. With approximately 50% of the Stage II capital
cost already incurred, this financing package will enable us to commence
commissioning of Kinsevere Stage II in late 2010 and achieve commercial
production in 2011. Annual production is expected to be 60,000 tonnes of Grade
A copper cathode at an estimated "C1"(1) cash cost of $0.89 per pound of
copper. We believe that Trafigura, an internationally renowned, independent
commodities trading company, represents an excellent long-term partner for
Anvil and we look forward to working with them to successfully complete
Kinsevere Stage II and further develop the Company's interests in the DRC."
Jeremy Weir, Executive Director of Trafigura commented, "The strategic
alliance Trafigura is forming with Anvil will provide a fully-financed
structure, with significant technical support, to enable the Company to
complete the construction of the Kinsevere SX-EW project and bring it into
production on a timely basis. Anvil has an attractive strategic position in
the Congo and our support will significantly enhance its capability to deliver
on our combined, future growth objectives."
BMO Capital Markets acted as financial advisor to Anvil on this
transaction. BMO Capital Markets was engaged by a special committee of the
Board of Directors of Anvil (the "Anvil Board") and has provided a fairness
opinion that the consideration offered pursuant to the Transaction is fair,
from a financial point of view, to Anvil.
Paradigm Capital Inc. was engaged by the Anvil Board and has provided a
fairness opinion that the consideration offered pursuant to the Transaction is
fair, from a financial point of view, to the shareholders of Anvil.
In connection with the Transaction, Anvil has been advised by its
counsel, Lawson Lundell LLP, and Trafigura has been advised by its counsel,
Stikeman Elliott LLP.
Under the terms of the Transaction, Trafigura will subscribe for Anvil
equity units (the "Units") by way of private placement, which will result in
proceeds to Anvil of $100 million. Each Unit will be issued at a price of
C$2.20 and consist of one common share of Anvil and 0.232 of one common share
purchase warrant (a "Warrant"). Each whole Warrant will entitle the holder to
acquire one common share of Anvil upon payment of C$2.75 (for a period of
thirty months from the date of issuance of the Warrant). The equity placement
price of C$2.20 per unit represents a 16% premium to the 30-day VWAP of the
common shares of Anvil on the Toronto Stock Exchange.
The equity financing will be undertaken in two tranches. Initially
15,644,293 Units will be issued, bringing Trafigura's aggregate equity
interest in Anvil to 19.9% (calculated giving effect to the exercise of the
Warrants and Trafigura's pre-existing holdings of 4,850,800 common shares of
Anvil, on completion of the first tranche). The first tranche is expected to
be completed during the week ending August 21, 2009. The number of Units to be
issued in the second tranche of the equity financing component of the
Transaction will depend on the US / Canadian dollar exchange rate when they
are issued. At the current exchange rate of C$1.00 = US$0.9228, the number of
Units in the second tranche would be approximately 33.6 million.
Completion of the second tranche of the equity financing is subject to
satisfaction of a number of conditions, including regulatory approval and the
approval of Anvil's shareholders. A special meeting of Anvil's shareholders to
approve the Transaction (other than the first tranche of the equity financing)
is expected to be held during October 2009. The members of Anvil's Board are
unanimously recommending that shareholders vote in favour of the Transaction
and have each executed support agreements to vote in favour of the
In addition to the equity financing, Trafigura will also make available
to the Company a loan facility (the "Loan Facility") with a total commitment
of $100 million. All amounts outstanding from time to time in connection with
the Loan Facility will bear interest at a rate per annum equal to LIBOR plus
4%, plus the cost of political risk insurance. The term of the Loan Facility
is five years from the first drawdown and funds available under the Loan
Facility may be drawn down only after funds made available from the equity
financing have been utilised. The Loan Facility is subject to other typical
conditions consistent with a commercial debt financing. Both Anvil and
Trafigura intend to refinance the Loan Facility with commercial banks.
Pursuant to the Loan Facility, the Company will establish a hedging
program, which is expected to involve hedging that portion of production from
Kinsevere Stage II that would cover at least principal and interest repayments
and operating costs. The details of the hedging program are yet to be
Additional Agreements with Trafigura
In addition to the agreements reached in connection with the equity and
debt financing, the Company has reached agreement with Trafigura on the
principal terms of an offtake agreement (the "Offtake Agreement"), a technical
services agreement (the "Technical Services Agreement") and an ancillary
rights agreement (the "Ancillary Rights Agreement"). These agreements will
become effective only upon receipt of shareholder approval and completion of
the second tranche of the equity financing component of the Transaction.
Anvil and Trafigura will enter into a life-of-mine Offtake Agreement, on
arms-length terms, for the sale of all products from the Kinsevere mine. With
the assistance of Trafigura, Anvil will seek LME registration of its copper
Technical Services Agreement
The Company will enter into an agreement with Trafigura regarding the
provision, on arms-length terms, of technical services during construction,
commissioning and commercial production of Kinsevere Stage II. Under the terms
of the Technical Services Agreement, a Technical Services Committee shall be
established, comprising an equal number of Anvil and Trafigura
representatives. The Technical Services Committee will have a broad mandate,
focused on the successful completion and operation of Kinsevere Stage II and
will report directly to the Anvil Board.
Ancillary Rights Agreement
The Ancillary Rights Agreement sets out Trafigura's rights following
completion of the second tranche of the equity financing including
representation on the Anvil Board of Directors, pre-emptive financing rights,
demand prospectus rights, as well as Trafigura's obligations to the Company
with respect to the broad distribution of its shares in Anvil and a standstill
in respect of further acquisitions of shares.
Under the terms of the Ancillary Rights Agreement, on completion of the
second tranche of the equity financing, Trafigura will be entitled to nominate
three of the seven members of the Anvil Board. Trafigura's entitlement to
nominate members of the Anvil Board is dependent on its shareholding in Anvil
such that the number of directors it is entitled to nominate reduces with a
reduction in its percentage interest in the Company.
Copies of the Subscription Agreement will be made available on SEDAR at
www.sedar.com under the Company's profile.
Purpose of Investment
Trafigura is acquiring the common shares and Warrants comprised in the
Units for investment purposes. Depending on market and other conditions and
subject to the terms of the Ancillary Rights Agreement, Trafigura may change
its beneficial ownership of, or control or direction over, common shares of
Anvil through market transactions, private agreements, treasury issuances,
exercise of the Warrants or otherwise.
Cash and Liquidity
As at August 7, 2009, Anvil had approximately $41.0 million in cash,
$10.4 million in available-for-sale investments and $5.2 million of
receivables, the majority of which it expects to realize during the third
quarter of 2009.
As previously announced, Anvil has commissioned Ausenco to finalize the
design work for Kinsevere Stage II and this work is expected to be completed
by the closing date for the second tranche of equity financing discussed
above. The Company therefore expects that once the full proceeds of this
financing are available to Anvil, it will be in a position to immediately
recommence construction work with the benefit of a fully completed engineering
and design package and a lump sum contract to complete the project.
Anvil will hold a conference call to discuss the Transaction on Monday,
August 10, 2009 at 10:00 a.m. (Toronto, Canada), coinciding with 10:00 p.m.
(AWST - Perth, Australia) on the same day.
The details to access the conference call and the live audio webcast are
Conference call: 1-416-644-3420
(Please call approximately five minutes prior to the scheduled start of
Live audio webcast of the conference call (listen mode only):
CNW Group website at:
Replay Information (available for a period of 7 days):
The conference call will be recorded and a playback of the call will be
available after the event by dialling 1-416-640-1917, reservation number
21312954 followed by the pound (number_sign) key.
The shares of Anvil Mining Limited are listed for trading on the Toronto
Stock Exchange (as common shares) and the Australian Securities Exchange (as
CDIs) under the symbol AVM. For further information on Anvil, please refer to
the Anvil website at www.anvilmining.com.
Trafigura is one of the largest independent commodities trading companies
today, actively sourcing and trading crude oil, petroleum products, renewable
energy, metals, metal ores and concentrates for industrial consumers, with
approximately 1,900 employees across 42 countries. For further information on
Trafigura, please refer to the Trafigura website at www.trafigura.com.
(1) The C1 Cash cost is the mine gate cash cost that includes export
duties and transportation and marketing charges but does not include
Caution Regarding Forward-Looking Statements: This news release contains
"forward-looking statements" and "forward-looking information", based on
assumptions and judgements of management regarding future events and results.
Such "forward-looking statements" and "forward-looking information which may
include, but is not limited to statements with respect to the terms of the
agreement with Trafigura; receipt of all necessary approvals and the timing of
such requirements and the Company's plans for expansions of the Kinsevere
copper mine. Often, but not always, forward-looking information can be
identified by the use of words such as "plans", "expects", "is expected", "is
expecting", "budget", "scheduled", "estimates", "forecasts", "intends",
"anticipates", or "believes", or variations (including negative variations) of
such words and phrases, or state that certain actions, events or results
"may", "could", "would", "might", or "will" be taken, occur or be achieved.
The purpose of forward-looking information is to provide the reader with
information about management's expectations and plans for 2009. Readers are
cautioned that forward-looking information involves known and unknown risks,
uncertainties and other factors which may cause the actual results,
performance or achievements of Anvil and/or its subsidiaries to be materially
different from any future results, performance or achievements expressed or
implied by the forward-looking information. Such factors include, among
others, the actual market price of copper, changes in project parameters as
plans continue to be evaluated, and the possibility of cost overruns, as well
as those factors disclosed in the Company's filed documents. There can be no
assurance that the Stage II expansion of the Kinsevere copper mine will
proceed as planned or that the transactions proposed with Trafigura will be
successfully completed within expected time limits and budgets or that, when
completed, the expanded production facility will operate as anticipated.
For further information:
For further information: Anvil: Bill Turner, President & CEO, +61 (8)
9481 4700, firstname.lastname@example.org (Perth); Robert La Vallière, Vice President,
Corporate Affairs, (Office) +1 (514) 448-6664, (Cell) +1 (514) 944-9036,
email@example.com (Montréal); Trafigura: Jeremy Weir, Executive
Director, +41 22 594-6904, firstname.lastname@example.org