The company has signed a legally binding conditional term sheet for a US$45-million debt facility with Sprott Resource Lending.
Australia’s Century zinc mine shut down last year, but junior miner New Century Resources (ASX:NCZ) is looking to give it a new lease on life.
Century was one of the world’s largest zinc mines before MMG (HKEX:1208), its previous owner, closed its doors. Mining ceased at the mine in 2015 after 16 years of operation, and the final ore was processed in January 2016.
New Century, formerly Attila Resources, announced plans to acquire Century and all of its associated infrastructure in March, and since then has been working to restart operations. It has been drilling at Century’s tailings deposit for the last few months, and in August it began a feasibility study focused on restarting operations at the mine using those tailings.
The company’s latest step came this Wednesday (October 11), when it signed a legally binding conditional term sheet for a US$45-million debt facility with Sprott Resource Lending. According to New Century, the funds should be available for drawdown on shortly after the feasibility study is finalized.
“New Century is very pleased to have secured this significant debt financing facility on attractive terms through Sprott, who are widely recognised as one of the world’s leading providers of finance to the natural resource sector,” said Evan Cranston, executive chairman at the company.
He added that the debt facility will expedite the restart of operations at Century, and noted that “the funding [will be] used for the commissioning process and achievement of first production in 2018.” The feasibility study for Century is due to be complete this month.
The company hopes to take advantage of the favorable zinc price environment. Prices reached a decade high over the summer, and continue to trade at an elevated level.
According to New Century, MMG is supportive of the work it is doing to bring Century back into production. New Century believes that once it starts producing zinc from the tailings at Century, it will be able to fund “much of the scheduled rehabilitation … through new cash flow generating site activities.” To date, MMG has spent over AU$70 million on rehabilitation at the site.
New Century’s share price rose as high as AU$1.63 on Wednesday after news of the debt facility hit the market, but had sunk back down to AU$1.51 by the end of the day. The company’s share price is up nearly 650 percent since it began trading in July.
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Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.