Banks commit US$230m to Aber

A banking group will provide a US$230-million debt facility to Aber Diamond (ABZ-T) so that the Toronto-based company can fund its share of the remaining capital costs at the Diavik project in the Northwest Territories.

The group includes the Bank of Montreal, the Canadian Imperial Bank of Commerce, Deutsche Bank, Export Development Corp. and the Royal Bank of Canada. The loan facility requires Aber to escrow US$45 million of its current US$70-million cash position as a contingency against any potential cost overruns.

To the end of September, Aber and London-based Rio Tinto (RTP-N) had spent $655 million on construction at the $1.3-billion project. Rio owns a 60% interest in the project; Aber, 40%.

“This is the largest debt financing for a single-asset mining company in the history of the Canadian mining industry,” says Aber President Robert Gannicott. He said the loan facility would not only cover the project’s completion costs, including the costs of Aber’s sorting and marketing facilities, but would provide “a generous cushion” should any unexpected costs arise. Gannicott anticipates that by the beginning of scheduled production in April 2003, Aber’s debt load at Diavik should total US$150 million.

The interest rate of the loan facility will be a floating rate tied to the London Interbank Offer Rate.