Signs US$76.5 Million EPC Contract For Las Chispas Process Plant Construction
In preparation for makinf a final construction decision based on a Feasibility Study for the Las Chispas Project in Mexico, SilverCrest Metals Inc.’s (TSX:SIL) Canadian subsidiary has entered into a project financing agreement.
The credit agreement with an affiliate of RK Mine Finance will provide a secured project financing facility for a total of US$120 million for the purpose of funding the construction of Las Chispas.
Concurrently, one of the company’s Mexican subsidiaries has entered into a fixed price Engineering, Procurement and Construction c(EPC) contract with Ausenco Engineering Canada Inc. and one of its affiliates, for construction of the Las Chispas process plant.
CEO, N. Eric Fier, said that while the Feasibility Study is still pending finalisation by Ausenco, with announcement of results targeted for late January 2021, SilverCrest says it is confident entering into the Credit Agreement and the EPC Contract based on the substantial feasibility information currently available.
Project Finance Facility
- US$120 million Facility with a total cost of capital of approximately 10% (refer to details below);
- Facility does not require mandatory hedging, cash sweeps, offtakes, production linked payments or equity issuances as part of its structure;
- US$30 million of the Facility has been drawn, and subsequent drawdowns are available upon satisfaction of certain customary conditions precedent. Drawdowns are not tied to any construction milestones;
- Facility has a four-year term with a 20-month availability period if 50% of the Facility is drawn or committed to be drawn within six months (June 30, 2021) and 75% of the Facility is drawn within 12 months (December 31, 2021);
- Up to US$30 million of the Facility can be used for exploration and regional acquisitions; and
- US$90 million remaining on the Facility, plus estimated cash at year-end of US$135 million, will provide a substantial component of funding for construction, exploration and regional growth initiatives.
- Lump sum turnkey price of US$76.5 million will include construction of a 1,250 tonne per day process plant at Las Chispas;
- Execution of Ausenco’s scope of work will begin in February 2021, and commissioning of the process plant is targeted for Q2 2022, with production ramp-up starting in Q3 2022;
- The construction execution plan includes stringent COVID-19 protocols including the use of a confined single room occupancy camp, designed to limit the potential for a virus outbreak at the site and in the local communities; and
- The EPC Contract represents a portion of the total scope of the planned construction but does not include development of the underground mine, confined camp, powerline, dry stack tailings facility, establishment of an analytical laboratory in the local community or the owner’s site costs.
“We are very pleased to have concurrently signed the Credit Agreement and the EPC Contract with two well-established and respected partners in the mining industry,” Mr Fier said.
“The commitment by both partners ahead of the targeted January 2021 release of the Las Chispas Feasibility Study speaks to the strength of our team and project.
“ While we recognize the challenges of building during this unprecedented time, we believe the strict and effective COVID-19 protocols that we have implemented on site, which are highlighted in these two important agreements, limit our risk. This news marks another important milestone on our path to production at Las Chispas.”