NORTHERN Cape junior copper producer Copper 360 has restructured R276.6m of short-term debt into long-term debt cutting the interest rate it is paying by more than 50%.
According CEO Shirley Hayes, “the restructuring of the short-term debt into long-term debt at more favourable interest rates strengthens Copper 360’s balance sheet significantly and is an important advancement as we mature into a sustainable, steady-state copper producer.”
Hayes took over from former CEO Jan Nelson with immediate effect at the end of December stating that she would “focus primarily on operational and financial excellence ensuring strict cost discipline.”
Nelson was appointed executive director of mineral resource strategy tasked with driving the development of the company’s cluster mining modeland “demonstrating the company’s value to investors”
Hayes said the ruling interest rate on the debt being restructured was 24.3% but this will drop to 11% at the current London Metal Exchange (LME) copper price of $9,136/t.
The new interest rate “will not be less than the prime rate charged by South African commercial banks and will include a variable component indexed to the LME copper price up to a maximum price of $15,000/t.”
The repayment dates of the debt have also been extended with settlement now to be on the fifth anniversary of the issue date of the new corporate bonds. Some R172.3m was previously due for immediate repayment.
According to Hayes, “this coupon structure assists Copper 360 by immediately reducing its interest burden and matching its future interest obligations with concomitant increases in revenue whilst providing the lenders with the opportunity to benefit directly from any upward movement in the copper price from the base price of $9,652/t.
She pointed out that, at the maximum specified copper price of $15,000/t , the replacement interest rate would be 17.4% annually.
