Cambior mortgages Niobec to help pay lenders

Montreal-based Cambior (CBJ-T) has arranged a minimum US$13-million mortgage on its half-interest in the Niobec niobium mine in Chicoutimi, Que.

The private Japanese investment company Jipangu will provide Cambior with US$10 million, while an unnamed financial institution will come up with the remaining US$3 million.

As well, Cambior says it is in discussion with a third lender for another US$3 million.

The US$13-million facility will be available as a single drawdown at closing by June 30 and will bear interest at the London Interbank Offer Rate plus 2.5%. It is repayable in 16 consecutive quarterly instalments, beginning March 30, 2001, and recourse is limited to Cambior’s half-interest in Niobec and the company’s share of cash flow from the mine.

In return for Jipangu’s facility, Cambior will issue 2.5 million warrants exercisable at US75 per share.

The deal requires the consent of Cambior’s lenders and Teck (TEK-T), which owns the other half of Niobec.

Cambior will use the new funds to pay the remaining US$17.2 million of a US$75-million commitment due June 30. The commitment arose from the spectacular failure of the company’s hedging program last September.

Since then, Cambior has rebuffed a merger offer from Aur Resources (AUR-T) and, instead, has focussed on selling off its non-gold assets.

The company raised US$48 million by selling its Bouchard-Hebert and Langlois zinc mines in Quebec to Breakwater Resources (BWR-T) and pocketed another US$7 million by unloading its Mexican assets to Glamis Gold (GLG-N).

In May, Jipangu took a US$5-million private placement in Cambior, consisting of 5 million units, each of which consists of one share plus a warrant to buy another share for C$1.60. If all the warrants are exercised, Jipangu will hold a 12.4% stake in Cambior.

Even after the US$75-million commitment is met, Cambior will still be roughly US$150 million in debt.