NEWSHeadline: URSA Major Minerals Arranges Metal Financing Facility
Symbol: UMJ
TORONTO, ONTARIO--(Marketwire - Feb. 17, 2010) -
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URSA Major Minerals Incorporated ("URSA Major") (TSX:UMJ) is pleased to announce that the Company has arranged a credit facility with Auramet Trading, LLC ("Auramet") to assist finance the Company's metal inventory and receivables associated with ore produced from the Shakespeare Mine. Auramet, based in Fort Lee, New Jersey, is a leading metals trading, merchant banking and advisory firm specializing in the global resource sector.
The total amount of the facility is US$2.5 million and advances under the facility are expected to commence next month and will match the production of ore from the Shakespeare Mine. The facility has an initial term of one year and is renewable annually thereafter, although it can be repaid and cancelled without penalty upon 90 days notice. The credit facility will be secured by in- process metal and receivables and will also provide for hedging of base metal prices between ore milling and final metals out- turn. Interest on advances under the facility will be variable and based on a spread over the London Interbank Offered Rate ("Libor") for US dollars. Based on current forecasts, the Company expects interest costs to be in the range of 5.00% to 6.00% in the first year.
URSA Major has also executed the definitive milling and smelting agreement with Xstrata Nickel for the processing of ore from the Shakespeare Mine. This agreement is pursuant to the Letter of Intent with Xstrata announced on November 19, 2009. The term of the contract is 24 months, subject to certain provisions that allow for early termination by either party, and provides for the processing of 200,000 tonnes of ore in 2010.
Richard Sutcliffe, URSA Major's CEO commented, "We are now mining ore and have arranged financing to support the production of nickel, copper, platinum and other metals from the Shakespeare Mine. The Auramet facility will provide working capital for our mining operations and is non-dilutive. Further, the facility will enable URSA to lock in our base metals prices at the time of ore delivery and will eliminate the pricing risk that occurs between ore delivery and final metal out-turn." He added, "We are planning an active exploration program in 2010 and resuming operations at Shakespeare will permit us to generate cash flow for advancing our nickel-copper and PGM properties."
The Company mobilized its contractors to the Shakespeare mine site last week (see press release dated February 4, 2010) and mining and crushing operations are currently underway. The Company expects to process about 200,000 tonnes of ore in 2010. Based on previous ore grades and metals recovery, the company estimates the 200,000 tonnes of ore will produce contained metals in concentrate of approximately 1.1 million lbs of nickel, 1.7 million lbs of copper, 55.7 thousand lbs of cobalt and 3,100 ounces of precious metals. The recovered and contained metals are subject to smelter recoveries and to further smelter deductions.
URSA Major is a Canadian mining company with two nickel sulphide projects containing significant 43-101 compliant nickel and copper reserves and resources. The Company is focused on becoming a mid-tier nickel producer and growing its nickel, copper and platinum group metal (PGM) deposits through exploration and development, primarily in Ontario, Canada.