PERTH (miningweekly.com) – Hong Kong-listed MMG has secured a $1-billion finance facility to develop the Dugald River zinc/lead/silver mine, in Queensland.

MMG reported this week that the China Development Corporation and the Bank of China would provide the debt facility, which would span a term of 13 years. The facility will be available for draw down until June 2016 with final repayment to occur on June 2026.

The debt facility completed the financing arrangements for the Dugald River mine, and the board of MMG was now expected to make a final investment decision on the project by December this year.

CEO Andrew Michelmore said this week that the completion of financing arrangements for Dugald River marked a key milestone for the project.

“We are pleased to take the next step in the development of the Dugald River project, with financing arrangements negotiated at very competitive terms. The project is now ready for final approval by the board.”


To date, MMG has sole funded some A$390-million on the Dugald River project, and would draw down $250-million under the debt facility for the remainder of 2013.

The project has a mineral resource of some 53-million tons, at 12.5% zinc, 1.9% lead and 36 g/t silver. The mine was expected to process an average of two-million tons a year of ore initially, to produce 200 000 t to 220 000 t of zinc concentrate, between 27 000 t and 30 000 t of lead in concentrate and around 900 000 oz of silver a year.

Michelmore said this week that the Dugald River project supported MMG's positive long-term view of zinc, supported by major mine closures that are expected to occur in the next five years. This includes MMG's Century mine, also located in Queensland.

“Dugald River is well timed to meet the expected supply gap created by future mine closures combined with low investment in zinc development and exploration projects in recent years. On the demand side, the continuing industrialisation and urbanisation of developing economies will drive demand growth over the long term,” said Michelmore.



He noted that site development was progressing well with total underground development now over 8 000 m and significant underground drilling and geotechnical work under way to enable detailed mine planning.

Construction of the permanent mine access road was about to start and a 100 000 t sample of Dugald River ore was being prepared for trucking to Century in July and August to conduct a production-scale process test using the Century plant.