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Dundee Precious Metals Inc. (TSX:DPM - News)(TSX:DPM.WT - News)(TSX:DPM.WT.A - News) ("DPM"
or "the Company") and its wholly owned subsidiary Chelopech Mining EAD ("Chelopech")
are pleased to announce today the signing of an aggregate of $66.75 million
in long-term loan agreements with the European Bank for Reconstruction and
Development ("EBRD") and Unicredit Bulbank ("UCB"). The proceeds from this loan
financing will be used to retire $16.25 million of existing EBRD indebtedness
and to assist in the financing of the Company's $150 million Chelopech mine and mill expansion in Bulgaria, to double
mine and mill output to two million tonnes of ore per
year. Construction on the expansion project, which is well underway and on
budget, is expected to be completed at the end of 2011.
"The signing of this key debt
financing arrangement for the Chelopech expansion
project with the EBRD and UCB is a significant milestone in the continued
development of the Chelopech mine, said Jonathan
Goodman, President and CEO of DPM. We appreciate the EBRD's continued
partnership with DPM on this important project and welcome UCB's interest and
participation. We are very pleased to have such a supportive and committed
lending group."
"The EBRD is pleased to support Chelopech Mining in its drive to increase ore production
with the implementation of the best available technology. We are delighted to
partner with UniCredit Bulbank
in financing this important project that will help Chelopech
Mining to improve its operations and raise environmental standards",
said Kevin Bortz, EBRD Director for Natural
Resources.
"The agreement that we are now
signing is proof that good projects may rely on financing from the banks.
Such good projects and the entrepreneurship will take Bulgaria out of the
economic crisis. By joining EBRD in this loan arrangement, UniCredit Bulbank underlines
its engagement to the sustainable development of the Bulgarian economy",
said UniCredit Bulbank
CEO and Chairman Mr. Levon Hampartzoumian.
The Loans, which are guaranteed by DPM
and secured by a share pledge, are repayable in ten equal semi-annual
installments, commencing June 2013 and bear interest at a rate of LIBOR plus
3.25% until project completion and LIBOR plus 2.80% thereafter. The UCB loans
are subject to a cash sweep which obligates Chelopech
to prepay up to an aggregate amount of 30% of Chelopech
surplus cash flow. This mandatory prepayment is limited to the equivalent of
two years of UCB loan repayment. As part of the financing, DPM and/or Chelopech is required to provide price protection on 15%
of Chelopech's 2012, 2013 and 2014 projected copper
production. DPM does not hedge its gold production. Financial covenants at
the Chelopech level include (i)
minimum forecast debt service cover ratio of greater than 1.25:1, (ii)
current ratio greater than 1.2:1, (iii) net worth of at least US$45 million
and (iv) reserve tail equal to or exceeding 30%. DPM financial covenants
include (i) current ratio greater than 1.5:1 and
(ii) net worth of at least $200 million. Costs of this arrangement include a
2% front-end commission.
European Bank for Reconstruction and
Development (www.ebrd.com):
The EBRD is an international financial
institution that supports projects in 29 countries, from central Europe to
central Asia. The Bank promotes entrepreneurship and fosters transition
toward open and democratic market economies. The EBRD provides project
financing for the financial and industrial sectors, both new ventures and
existing companies.
UniCredit Bulbank (www.unicreditbulbank.bg):
UniCredit Bulbank is
the biggest Bulgarian bank in terms of assets, exceeding BGN 11 billion as of
end of June 2010. The Bank is servicing over one million individual clients
and households, high profile private customers, small and mid-sized
businesses, larger domestic and multinational corporate entities,
municipalities and budget enterprises.
Dundee Precious Metals (www.dundeeprecious.com):
Dundee Precious Metals Inc. is a
Canadian based, international mining company engaged in the acquisition,
exploration, development, mining and processing of precious metals
properties. The Company's operating interests include its 100% ownership of Chelopech Mining EAD, its principal asset being the Chelopech mine, a gold, copper, silver concentrates
producer located east of Sofia, Bulgaria, a 100% ownership of Namibia Custom
Smelters (Pty) Ltd., a concentrate processing facility located in Tsumeb, Namibia, and a 95% interest in Deno Gold Mining Company CJSC, its principal asset being
the Kapan mine, a gold, copper, zinc, silver
concentrates producer located in southern Armenia. DPM's interests also
include a 100% interest in the Krumovgrad
development stage gold property located in south eastern Bulgaria, near the
town of Krumovgrad and certain exploration and
exploitation properties in Serbia.
FORWARD-LOOKING STATEMENTS
This news release may contain certain
information that constitutes forward-looking statements. Forward-looking
statements are frequently characterized by words such as "plan,"
"expect," "project," "intend,"
"believe," "anticipate" and other similar words, or
statements that certain events or conditions "may" or
"will" occur. Forward-looking statements are based on the opinions
and estimates of management at the date the statements are made, and are
subject to a variety of risks and uncertainties and other factors that could
cause actual events or results to differ materially from those projected in
the forward-looking statements. These factors include the inherent risks
involved in the exploration and development of mineral properties, the
uncertainties involved in interpreting drilling results and other geological
data, fluctuating metal prices and other factors described above and in the
Company's most recent annual information form under
the heading "Risk Factors" which has been filed electronically by
means of the Canadian Securities Administrators' website located at www.sedar.com.
The Company disclaims any obligation to update or revise any forward-looking
statements if circumstances or management's estimates or opinions should
change. The reader is cautioned not to place undue reliance on
forward-looking statements.
Contact:
Contacts:
Dundee Precious Metals Inc.
Jonathan Goodman
President & Chief Executive Officer
(416) 365-2408
jgoodman@dundeeprecious.com
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