Trafigura arm extends $20 mln to Mawson West's Congo copper mine

Wed Mar 2, 2016 6:15pm EST
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March 2 (Reuters) - Global commodity merchant Trafigura's investment arm will lend $20 million to an Africa-based copper mine owned by Mawson West Ltd, as the Australian miner prepares to shutter a copper operation in an effort to deal with sinking metal prices.

Galena, Trafigura's private equity arm, is the largest shareholder in Mawson West and will provide the loan to the company's unit, Anvil Mining Congo SA.

Mawson West also said on Wednesday that it would put its mining operations at the Kapulo mine in Democratic Republic of Congo on care and maintenance by the end of this month.

Copper prices are languishing at six-and-a-half year lows amid concerns about waning demand from China, the world's top consumer of industrial metals.

The alternative to the financing would more than likely be insolvency proceedings, acting Chief Executive Anthony Lloyd said in a statement.

"At current prices, the company was producing at levels insufficient to cover its operational and financial obligations."

The company also said it was facing difficulties in satisfying its payables in a timely manner.

Mawson West also amended its prepayment facility with Trafigura by which payments due will cease until the mining operations resumed.

Galena will get warrants giving it the right to acquire up to 2.74 billion of Mawson West shares at C$0.01 per share until Dec. 31, 2017. (Reporting by Arathy S Nair in Bengaluru; Editing by Sriraj Kalluvila)