Aur lines up money for QB

An equity deal underwritten by CIBC World Markets and Research Capital is to provide the remainder of the financing Aur Resources (AUR-T) will need to buy a 76.5% interest in the Quebrada Blanca copper mine in northern Chile.

The two houses will take 10 million shares in Aur at $2.90 per share, with an option to take a further 1 million on or before the deal’s closing date of Nov. 1.

Issuing 10 million shares would bring the number of outstanding Aur shares to 85.7 million.

Aur is acquiring the Quebrada Blanca interest from Teck (TEK-T) and Cominco (CLT-T). That deal, originally scheduled to close in mid-June, was extended and is now expected to close in November. A total of US$187.2 million is payable on closing, including US$3.8 million in interest.

Teck will hold part of the purchase price as cash, and Cominco plans to use its share to pay down debt. The minority interest in Quebrada Blanca is owned by the Chilean firm Inversiones Mineras Pudahuel, which has a 13.5% stake, and Empresa Nacional Mineras (Enami), which is carried for 10%.

The extension to closing has cost Aur an additional US$500,000, payable to Cominco within 90 days of closing. Aur also agreed to put up a US$3-million deposit and to advance interest payments accrued from the beginning of September on parts of the purchase.

A US$35-million payment, originally scheduled for mid-December 2002, has been pushed back to the end of 2003. Up to US$40 million in additional payments are called for, depending on the copper price, which must exceed US$1.10 per lb. for payments to kick in. There are payments to Enami as well.

The deal makes Quebrada Blanca essentially debt-free, with Aur buying out US$75.6 million in project debt and US$2.3 million in interest.

Aur had already lined up a US$170-million line of credit with three banks. Under the provisions of that line of credit, Aur has made forward sales of copper amounting to about 25,000 tonnes in 2001 and about 30,000 tonnes between 2002 and 2004. Ultimately, about 40% of the mine’s production — will be sold forward.