August 10, 2009 / 4:37 PM / 9 years ago

UPDATE 2-Anvil to get $200 mln financing, shares soar

* Trafigura to provide debt and equity financing

* Deal to fast-track Kinsevere Stage II project

* Anvil shares jump 16.8 pct in Toronto (Adds details on financing, background, analyst comment; in U.S. dollars unless noted)

By Euan Rocha

TORONTO, Aug 10 (Reuters) - Anvil Mining Ltd AVM.TO said on Monday that independent commodities trading company Trafigura Beheer BV has agreed to provide $200 million in equity and debt financing to fund the construction of a copper mine in the Democratic Republic of Congo (DRC).

Anvil said that with about half the capital cost at the Kinsevere Stage II project in Congo already incurred, the financing package will enable it to start commissioning the project in late 2010 and begin commercial production in 2011.

The news sent Anvil shares up 16.8 percent or 40 Canadian cents to C$2.78 on the Toronto Stock Exchange at midday.

“We view this as positive as Kinsevere is now fully funded to production, and it removes a key risk for the company,” RBC analyst Cailey Barker said in a note to clients.

The financing deal will give Trafigura a 36 percent stake in Anvil, with the option to increase its holding to 39 percent, the Australian-based miner said. Anvil is listed on the Australian Stock Exchange and Toronto Stock Exchange, and is focused on projects in the DRC.

Anvil’s Kinsevere Stage I project is currently in operation, it also has two projects that have been temporarily idled and put on “care-and-maintenance,” status, due to a collapse in the price of copper.

The Kinsevere Stage II project is expected to produce 60,000 tonnes of copper a year and the company also has other exploration properties in the DRC.

Anvil’s shares have fallen more than 80 percent over the past two years after the DRC government initiated a review of its mining leases in the country.

The global economic slowdown and the collapse in copper prices further hurt the company, but the shares have risen 156 percent so far this year as copper prices have improved and it has been able to reach agreements with the DRC government regarding its mining leases.


Anvil said, as part of the deal, Trafigura will buy $100 million of its shares in a private placement.

Each unit will be priced at C$2.20 — a 7.6 percent discount to Friday’s close on the Toronto Stock Exchange — and will consist of one Anvil common share and warrant to buy 0.232 of a common share.

The warrants will entitle the holder to buy one whole common share of Anvil at C$2.75, for a period of 30 months from their date of issue, the company said in a statement.

The equity financing will be undertaken in two tranches. The second tranche, along with the debt financing and other agreements will be subject to shareholder approval.

Trafigura will also make available a five-year loan facility with a total commitment of $100 million.

The deal also gives Trafigura the right to nominate three of the seven members of the Anvil board.

A special meeting of Anvil shareholders is expected to be held in October. Anvil’s board has unanimously recommended that shareholders vote in favor of the transaction.

Anvil and Trafigura have also entered into a life-of-mine off-take agreement related to the sale of all products from the Kinsevere mine, and an agreement regarding the provision of technical services during the construction and commissioning of Kinsevere Stage II.

As at Aug. 7, Anvil had about $41.0 million in cash, $10.4 million in available-for-sale investments and $5.2 million of receivables, the majority of which it expects to realize during the third quarter of 2009. ($1=$1.08 Canadian) (Additional reporting by Isheeta Sanghi in Bangalore; editing by Rob Wilson)

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