Boliden, South Atlantic shake on Storliden financing

Partners Boliden (BOL-T) and Swedish-listed North Atlantic Natural Resources, in which Boliden and South Atlantic Resources (SCQ-V) each own 38%, have agreed to a financing structure to bring the Storliden copper-zinc deposit into production. Storliden is northwest of Skelleftea, Sweden,

Boliden will be the principal contractor during the construction phase and will operate the mine once it is in production. Ore will be trucked 100 km to the Boliden mill, just west of Skelleftea, for processing. Feasibility studies estimated the capital cost of the mine at Kr118 million (Kr = kronas), plus Kr24 million for modifications to the Boliden mill.

North Atlantic’s share of the capital cost will be financed from a credit line of Kr142 million (about US$14 million) provided by Boliden. Boliden will charge for underground development at cost plus 20%. The company has already advanced an underground ramp 200 metres under interim arrangements; the final ramp will be 960 metres long.

Storliden has a minable reserve of 1.8 million tonnes grading 10.3% zinc and 3.43% copper, plus 0.25 gram gold and 24 grams silver per tonne. The mine will produce 1,000 tonnes of ore daily, which translates into 25,200 tonnes zinc and 11,150 tonnes copper in concentrate annually. The current schedule sees production starting in early 2002.

The credit line bears interest at the Stockholm interbank offer rate (STIBOR) plus 2%. At presstime, 3-month STIBOR loans were charged at 4.06%. North Atlantic will be paying the loan back from 75% of initial revenue, which allows it to recover exploration costs of US$5 million.