CHILE – A major industrial bank has agreed to finance US$1 billion of the US$1.65 billion development cost for the Cerro Casale gold/copper project, say BEMA GOLD and ARIZONA STAR RESOURCE, which together hold 49% of the project. The indicative term sheet for an underwritten project loan is subject to various conditions "typical" of a project financing loan but "confirms that Cerro Casale is financable," the companies said in separate statements.
However, PLACER DOME, which holds the other 51% of the project, says it has nothing clear-cut to report on the subject. "Discussions with banks have been generally positive but there are a bunch of issues that still need to be gone through," said Placer Dome investor relations director Greg Martin. The company has received a number of proposals from banks over the last five or six months, he added. Placer Dome is due to issue a quarterly statement to its partners on Sept. 30 as to whether Cerro Casale can be financed.
On July 2, Arizona Star and Bema Gold issued a default notice to Placer Dome for failing to make "reasonable efforts" to ascertain whether it is possible to finance the project after the company stated it was not in the quarterly document issued June 30. The two said two weeks ago that, "Given the ongoing discussions between the shareholders and the positive bank proposal, Arizona Star has elected to hold in abeyance any potential arbitration proceedings under the shareholders’ agreement."
Martin said that while there were differences of opinion over financing alternatives, "good dialog continues" between Placer Dome and its partners at Cerro Casale.
Large-scale, low-grade Cerro Casale will produce about 975,000 oz/year of gold and 130,000 tonnes/year of copper via open pit methods over 18 years based on a measured and indicated resource of 25.4 million oz of gold and 2.90 million tonnes of copper. The project is located in northern Chile’s Region III.