Tiger Resources has secured $80 million in financing to help develop stage two of its 60 per cent owned Kipoi copper project in the Democratic Republic of Congo.
The company announced this morning it had mandated Nedbank Capital and Rand Merchant Bank to arrange an $US80 million debt financing facility following a competitive tender process.
The funding will give the company additional flexibility to develop Solvent Extraction Electrowinning plant as part of its stage two development at Kipoi.
A definitive feasibility study, also released by the company today, showed the plant would cost $160.9 million to build.
The study described the plant as a low-cost, high-margin project which could be commissioned after 16 months of development for a low capital cost.
Tiger said the financing would help the company achieve its goal of becoming a 50,000 tonnes per annum cathode copper producer, with stage two production from the new plant slated for 2014.
Tiger managing director Brad Marwood said the positive response received from major financial institutions to the company's tender process reflected the robustness of the Kipoi project, which already produces 36,000tpa of copper in concentrate.
"The facilities will stand behind the cash flows generated by the existing Kipoi stage one heavy media separation operation and, based on the definitive feasibility study results and the current consensus outlook for the copper price, will provide a prudent buffer in financing the stage two development," he said.
The company has also secured hedging arrangements to protect it from any significant falls in the price of copper and ensure stability of revenue.
Tiger said its definitive feasibility study was based on a copper price of $US3.40 per pound in 2014-2017 and $US3 a pound from 2018 onwards, generating an after-tax internal rate of return of 44 per cent and a net present value (at a discount rate of 8 per cent) of $US378 million.
The company said copper prices of $3.50 and $4 would increase the net present valuations to $483 million and $659 million respectively, and the internal rates of return to 49 per cent and 62 per cent respectively.
Tiger shares were up 1.5 cents, or 4.55 per cent, to 34.5 cents at 10.05am.