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WARSAW, July 11 (Reuters) - Europe’s No.2 copper producer KGHM has signed a five-year revolving credit deal worth $2.5 billion with a group of international and local lenders to finance mining projects and facility upgrades, it said on Friday.
The Polish state-controlled miner said the credit would also be used to refinance the $700 million debt of KGHM International - the subsidiary controlling its foreign assets.
Warsaw-listed KGHM, which has a market value of $8.1 billion, said that the loan may be drawn in up to 25 renewable tranches and that it secured a possibility of two one-year extensions at its request.
For a company statement listing its lenders click here
The news of the credit deal confirms a Reuters report from May.
Lower global copper prices at the end of 2013 and for much of this year have weighed on KGHM’s profitability.
Analysts polled by Reuters expected KGHM to book a net income of 2.26 billion zlotys ($742.7 million) this year, its lowest since 2004.
The miner, almost debt-free before the deal, added it was in talks with the European Investment Bank (EIB) on another loan.
It reiterated that the ceiling for its debt levels was double its annual earnings before interest tax, depreciation and amortisation (EBITDA). The company posted EBITDA of almost 5 billion zlotys last year.
KGHM is about to launch production at its Chilean copper project in Sierra Gorda, one of the world’s largest copper projects. Earlier this year, it said that Sierra Gorda’s costs may exceed $4 billion.
The miner, which is also the world’s largest silver producer, has other projects in Germany, Canada, and the United States.
However it said that 60 percent of the credit facility signed on Friday would be used for projects in Poland.
Its investment plans, pegged at 4.3 billion this year alone, include smelter upgrades and other projects aimed at cutting its mining costs.
$1 = 3.0430 Polish Zlotys Reporting by Adrian Krajewski; Editing by Christian Lowe and Pravin Char