www.formationmetals.com
Formation Metals is a mineral exploration, development and refining company with interests in base, precious metal and uranium projects in Canada, the United States and Mexico.
Formation says Union Bank takes over as lead arranger for Idaho project credit facility
Formation Metals (TSE:FCO) said Tuesday that Union Bank has taken over as lead arranger for the company's US$77.7 million credit facility, to be used for the development of its Idaho cobalt project.
Under the agreement, Union Bank is to act as lead arranger in providing a credit facility supporting the company's US$77.7 million in tax-exempt "Recovery Zone Facility Bonds".
A portion of the proceeds from the sale of the bonds will be used to finance the development of Formation's Idaho cobalt project, with the remaining funds held in trust in the company's construction account.
The credit facility will provide letter of credit support, which will free restricted cash from the bonds for the further development of the project, Formation said.
It is expected that the transaction will close around March 15.
The Idaho project consists of the mine and concentrator near Salmon, Idaho and a cobalt production facility near Kellogg, Idaho.
Formation said Union Bank was involved as one of the key syndicate members in a previously structured credit facility, with a "major Eurozone bank" as the lead arranger, but the facility could not be finalized due to the prevailing eurozone debt market turmoil.
"During the previous structuring efforts, a favorable independent engineering report was completed along with two positive independent cobalt market studies," Formation said in a statement Tuesday.
"Extensive" legal due diligence was also completed, the cobalt company said. Formation also said that Union Bank is also proposing to arrange a club of underwriters that could include additional lenders.
"Although the Eurozone situation has impacted the financial markets in general, as a US institution that is part of the Mitsubishi UFJ Financial Group, Union Bank has been far less impacted by the Eurozone situation than the Eurozone banks," said Formation Metals CEO, Mari-Ann Green.
"We are very pleased to be able to work with Union Bank. Their prior involvement as a syndicate member will allow them to quickly move forward on structuring the new facility."
Initial production from the Idaho cobalt project is targeted for the fourth quarter of this year.
During the past months, the company has continued to advance construction and engineering on the project, including additional detailed engineering, concrete work, refurbishing the copper circuits at the cobalt production facility, and rock bolting at the mine site.
The aim is to produce high purity cobalt metal suitable for applications in the superalloy sector, as well as by product copper and gold. Cobalt is used in a wide range of environmental and high-tech applications, including re-chargeable batteries and superalloys used in the aerospace sector.
Aside from the Idaho project, Formation also holds interests in base, precious metal and uranium properties in Canada, the US and Mexico.
Union Bank operated 404 full-service branches in California, Washington, Oregon and Texas, as well as two international offices, on September 30, 2011. It is a subsidiary of the Mitsubishi UFJ Financial Group, one of the world's largest financial organizations.
