Very prudent. SMF

Orvana Minerals unit to repay EVBC loan sooner

2014-06-30 07:41 ET - News Release

Mr. Michael Winship reports

ORVANA ACCELERATES REPAYMENT OF EVBC LONG-TERM DEBT

Orvana Minerals Corp.'s wholly owned Spanish subsidiary, Kinbauri Espana SLU, has agreed to restructure its loan agreement maturing Sept. 30, 2016, relating to its El-Valle Boinas and Carles mines in Spain.

The initial principal amount of the EVBC loan was $64-million, with proceeds primarily used to complete the construction of the EVBC mines. The principal balance outstanding on April 2, 2014, was $37.5-million. The amendments, expected to be effective July 11, 2014, will result in a new maturity date of Nov. 30, 2014, and a number of principal repayments as set out from (i) restricted cash, Copperwood proceeds and working capital; (ii) required quarterly principal repayments; and (iii) the closure of outstanding derivative instruments.

EVBC loan (U.S. $)                                                 Thousands 

Principal balance outstanding -- April 2, 2014                       $37,460
(Less)
Repayment July 2 (currently held by lender as
restricted cash)                                                     ($3,990)
Repayment Oct. 2 (from working capital -- to be
delivered as restricted cash June 27)                                ($3,990)
Estimated repayment to be made on effective date
(currently held by lender as restricted cash) (1)                    ($6,700)
Repayment to be made on effective date (from
Copperwood proceeds)                                                 ($2,000)
Estimated repayment to be made following effective
date (from closure of derivatives) (2)                      ($10,000-$12,000)
Repayment on Aug. 31 (from working capital)                          ($1,000)
Repayment on new maturity date (from working capital --
to be delivered as restricted cash Sept. 30)                         ($4,549)
Estimated principal to be repaid on new maturity date       $3,231 to $5,231

1. An amount of 5.0 million euros has been held as restricted cash in the
event Kinbauri was required to deposit an additional environmental
reclamation bond under Spanish mining regulations. This amount will be
converted into United States dollars and repaid as principal under the EVBC 
loan on the effective date.
2. Under the EVBC loan, required gold, copper and U.S. dollars/euro 
derivative instruments were previously put in place. Within three business 
days of the effective date, all derivative instruments outstanding at that 
time will be terminated with the realized proceeds to be applied as a
repayment of principal under the EVBC loan. At March 31, 2014, the 
mark-to-market value of the derivative instruments outstanding at that time
was approximately $13.1-million. The value of the outstanding derivative
instruments fluctuates daily. There is no assurance relating to the
amount of the proceeds to be realized on the closure of the outstanding
derivative instruments.

At this time, Orvana intends to repay the outstanding principal on the new maturity date from working capital. Under the amendment to the EVBC loan, certain financial covenants and non-compliance matters have been waived until the new maturity date.

"The restructuring of the EVBC loan has been one of our objectives. We expect that following the full repayment of the loan, we will have additional financial flexibility across the organization to pursue our business objectives," said Michael Winship, president and chief executive officer.

As a condition to the amendments to the EVBC loan, Orvana had to establish a working capital line of credit in the minimum amount of $6.5-million (U.S.) until the new maturity date. As a result, Orvana is in the process of establishing a working capital line with Fabulosa Mines Ltd., the company's 51.9-per-cent shareholder, until Dec. 31, 2014, on similar terms as the Fabulosa loan, as described in the management's discussion and analysis dated May 14, 2014. In connection with this facility, the company will pay a structuring fee of 2 per cent for a total of $130,000 and issue warrants to Fabulosa to purchase 100,000 common shares, exercisable for five years at an exercise price of 54 cents, subject to the approval of the Toronto Stock Exchange.