Stornoway Diamond (TSX: SWY) has lined up a $944-million financing deal to build its Renard diamond mine in Quebec. The binding agreement signed with three parties constitutes the largest ever project financing package for a publicly listed diamond company.
The complex deal involves debt, equity and streaming components, and involves funding from the Quebec government, a private equity firm, an institutional fund, and an equipment manufacturer. The company expects to start construction in June, plant commissioning in the third quarter of 2016, and commercial production in the second quarter of 2017.
Private equity firm Orion Co-Investments will provide US$360 million (C$396 million): US$110-million in equity financing; US$200 million for a 16% streaming interest; and US$50 million in a 7-year, unsecured convertible loan with an interest rate of 6.25%.
Resources Quebec, a subsidiary of provincial agency Investissement Québec, will provide $220 million: $100 million in equity financing; $100 million in a 10-year senior secured loan at an interest rate of prime plus 4.75%; and another $20 million in a senior secured loan for credit overrun facilities.
Institutional fund manager Caisse de dépôt et placement du Québec will provide $105 million: $22 million in equity; US$50 million for a 4% streaming interest in Renard; and $28 million in an unsecured, non-convertible loan for credit overrun facilities.
Another $184 million in equity will be offered to the public through Scotiabank, Dundee Capital Markets and RBC Capital Markets.
Stornoway has also entered into a mandate letter with Caterpillar Financial for equipment financing of at least US$35 million (for equipment manufactured by Caterpillar and others).
Each element in the proposed series of transactions is conditional upon completion of the others. Stornoway shareholders will also have to approve the comprehensive financing package at special meeting in late May.
Preproduction capital costs at Renard were last pegged at $755 million.
Matt Manson, Stornoway’s president and CEO, noted in a release that the financing package was designed to fund Renard through construction to commercial production, including all contingencies, capital escalation allowances, and other costs.
For the rest of this article, click here: http://www.miningmarkets.ca/news/stornoway-lands-944m-financing-agreement-to-build-renard-diamond-mine/1003007872/rq0wMrp3vyWrlxu0q82vM20/?ref=enews_NM&utm_source=NM&utm_medium=email&utm_campaign=NM-EN04112014