Monument Loses $10M Credit Line

VANCOUVER — Two lenders have backed out of a $10-million credit facility earlier promised to Monument Mining (MMY-V, MMTMF-O). But despite the loss of funds, the company says construction of its Selinsing gold project in Malaysia is still going ahead.

In July, Monument closed a two-part $38.1-million financing: $28.1 million as a non-brokered private placement and the rest as a convertible credit facility with Quasiinfiinity and Madrague Equities. At the time, Monument said the funds would be used for construction at Selinsing, to retire debt, pay for exploration programs and cover administrative costs.

Four months later, Monument’s board of directors approved a $17- million construction budget and Monument sent a drawdown notice to its two lenders advising them to make the $10 million available by Dec. 12.

But in a response to that notice, Monument says the two lenders, citing market conditions and the global credit meltdown, have cancelled the credit facility.

Despite being out $10 million, however, Monument says it can still bring the Selinsing project to production by delaying full construction of its 1,200-tonne-per-day treatment facility.

It had planned on building both gravity and carbon-in-leach (CIL) circuits, but with funds tighter than expected, it will initially build only the gravity circuit.

With $12.6 million in the bank, Monument says it can pay for the $10.2-million gravity circuit without having to source additional funds.

It says it would then build the CIL circuit with funds generated by production from the gravity circuit.

How this would affect previously planned production is unclear, though Monument says the effects will be minimal.

In a plan that included a CIL circuit, Monument forecasted it would recover 40,000 oz. gold per year over an estimated four-year mine life at a US$341-per-oz.-gold cash cost.

The Selinsing project has an indicated resource of nearly 5 million tonnes grading 1.49 grams gold per tonne.

Now the company says it plans to release an updated construction schedule and revised production plan in early 2009.

The upside to the amended plan, the company says, is that Monument will be left without any debt or the need to raise equity in a market where it says it is undervalued.

Monument says work continues at the project, about 100 km north of Kuala Lumpur. Roads and earthworks are complete and construction of a hydropower substation is ongoing. Monument has ordered or is ordering long lead items.

On news of the change of plans in late December, Monument’s share price dipped 6¢ to close at 17¢, recovering the loss the next day. Monument has traded in a 12-month range of 14-63¢ and has about 124 million shares outstanding.