core sector communique

Equinox Establishes New US$400 Million Corporate Loan Facility to Extinguish Lumwana Project Debt Facilities

TORONTO, ON – Equinox Minerals Limited (TSX and ASX: EQN) (“Equinox” or the “Company”) is pleased to announce today that it has secured commitments from four leading commercial banks, Standard Bank Plc, Standard Chartered Bank, Industrial and Commercial Bank of China and BNP Paribas, to provide a new corporate loan facility (the “Corporate Facility”) totaling US$400 million.
As the Corporate Facility affords Equinox greater flexibility than the existing project debt facilities, the Company will utilize the Corporate Facility to repay its existing senior and subordinated project debt facilities provided to the Company’s wholly owned subsidiary Lumwana Mining Company (“LMC”) in 2006 for the development of the Company’s Lumwana copper mine in Zambia.
The securing of the Corporate Facility reflects a maturing of Equinox as a significant global copper producer and demonstrates recognition by international banks of the Company’s attractive and stable, long-term future prospects.
Equinox President and Chief Executive Officer, Craig Williams, said, “the provision of this loan facility by a core group of international commercial banks is recognition of the strength of the Lumwana copper mine and the long-term prospects of the Equinox group.
“Refinancing our existing project debt facilities with a corporate loan reflects our transition from a developer to an operator of a world class mining asset. Our Company will benefit from the increased flexibility in the structure of this facility and is now very well placed to move to the next phase of its growth.”
The US$400 million Corporate Facility is subject to the execution of documentation and meeting conditions precedent. The Company is well advanced in this process and expects to achieve financial close during March 2010. The key features of the Corporate Facility are as follows:
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A 3 year US$220 million term loan (the “Term Loan”) with quarterly principal and interest repayments commencing on March 31, 2010. This facility attracts a credit margin of 4.00% over LIBOR and Equinox anticipates principal repayments during 2010 will total approximately US$75 million;
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A 5 year US$180 million revolving facility (the “Revolving Facility”) that allows the Company to repay and redraw up to the facility limit over its term. The credit margin is 4.75% over LIBOR for the first two years, thereafter reducing to 4.00% over LIBOR. Interest charges are payable quarterly in arrears commencing on March 31, 2010. Three years after the first drawdown and annually thereafter, the Company can request a 12 month extension to the expiry date of the Revolving Facility;
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The Company can request an increase in the amount available under the Term Facility by US$80 million and/or the Revolving Facility by US$100 million, subject to the approval of the lenders;
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The Corporate Facility contains certain financial covenants based on the consolidated accounts for Equinox that are considered to be typical for a facility of this nature. The Corporate Facility also contains covenants that are specific to the performance of the Lumwana copper project. The Corporate Facility is less restrictive than LMC’s existing project debt facilities and does not contain any cash sweep provisions, nor does it require Equinox to maintain the existing US$45 million Cost Overrun Facility (that still remains undrawn);
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There are no mandatory hedging requirements attaching to the Corporate Facility;
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Equinox will incur certain break fees under the existing project debt facilities as a result of the refinancing. The amount of these break fees is still being finalized but is expected to be in the range of US$15 million to US$20 million; and
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The existing asset backed finance facilities for the mining fleet, currently totalling US$104.3 million, will remain in place.
“We would like to take this opportunity to acknowledge the pivotal role that our existing project finance banks played in the development of the Lumwana copper mine. Our project finance lending group included a number of development finance institutions as well as commercial lenders and without their support and belief in Equinox and Lumwana, the project would not have been able to be built,” Mr Williams added.