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Augusta expects the Rosemont project can sustain debt financing of 65%-70% of the total project capital cost, which amounts to approximately $625 million. The Company expects that equipment related financing, concentrate off-take financing and senior debt financing will comprise US$150 million, US$200 million and US$275 million respectively of the total debt requirement. The Company has received significant interest from lending institutions and credit agencies, and is currently in negotiations with smelters for delivery of concentrates with associated project financing commitments. Endeavour Financial is advising Augusta with regard to project financing.
On July 21, 2009, Augusta announced the signing of an agreement for the purchase of 23, 250-ton Caterpillar 793F haulage trucks. The purchase was made by Augusta's wholly owned subsidiary Rosemont Copper Company from Empire Southwest LLC, a Caterpillar dealership headquartered in Mesa, Arizona. Contingent with the purchase agreement signed by the parties, Augusta and Caterpillar Financial Services Corporation, USA, have agreed on a term sheet for a capital lease of the Caterpillar trucks and other related equipment for an amount up to US$100 million.
- On February 11, 2010, Augusta signed a definitive agreement with Silver Wheaton Corporation under which the Company has agreed to provide Silver Wheaton with silver and gold in an amount equal to 100% of the payable silver and gold to be produced by the Rosemont Copper Project.
Silver Wheaton will pay Augusta upfront cash payments totaling US$230 million and payments of US$3.90 per ounce of silver and US$450 per ounce of gold delivered during the mine life or the prevailing market prices if lower (subject to inflationary adjustment). The upfront payment will provide a portion of the project funding for the construction of the Rosemont mine and will be drawn post permitting for construction. The 2009 Rosemont Updated Feasibility Study detailed precious metals production averaging 2.4 million ounces of silver and up to 15,000 ounces of gold per year over a projected twenty-two year mine life.
The investment by Silver Wheaton is subject to receipt of all necessary permits to construct and operate Rosemont and Augusta having entered into committed arrangements for sufficient additional financing to construct and operate the mine. Final permitting is expected during the fourth quarter of 2010.
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On April 23, 2010, Augusta announced the closing of the senior secured loan agreement and copper concentrate off-take agreement with Red Kite Explorer Trust. Under the loan agreement Red Kite will provide a US$43 million loan, with interest payable at LIBOR plus 4.5%, maturing on the earlier of: (i) April 22, 2012 or (ii) the date of closing of the senior debt financing facility for the Rosemont copper project. The loan can be repaid without penalty at any time prior to maturity, and Augusta has a one-time option to extend the maturity date by one year for a fee of 2%, to be declared no later than October 22, 2011.
As part of the loan agreement Augusta has paid an origination fee of 2% and issued 1,791,700 warrants to Red Kite. Each warrant is exercisable for one common share of Augusta at C$3.90 per common share for a period of three years from today. Proceeds from the loan will be used for the redemption of the existing debt on the balance sheet of Augusta's 100%-owned subsidiary Rosemont Copper Company.
Under the terms of the off-take agreement, Augusta will supply Red Kite with 16.125% of Rosemont's copper concentrate production per year, starting in 2012 when Rosemont reaches commercial production and ending when 483,750 dry metric tonnes have been delivered to Red Kite. The off-take agreement includes market pricing and competitive payables for metals including benchmarked treatment and refining charges. |
