Zambia's Lumwana gains refinancing loan

Four banks have signed a US$400mn loan facility to Zambia’s Lumwana Mining Company (LMC) to refinance the company’s existing senior and subordinated project finance debt.

The banks involved are Standard Bank, Standard Chartered and BPN Paribas and Industrial and Commercial Bank of China (ICBC).

Of the four, only ICBC was not already a lender to LMC through either existing project finance facilities or separate fleet financing arrangements.

The loan is split into two tranches, a US$220mn term loan with a three-year maturity, and a US$180mn revolving facility that allows LMC to repay and redraw up to the facility limit over its five-year tenor.

Furthermore, LMC can request an increase in the amount available in the term loan by US$80mn and the revolving facility by US$100mn, subject to the banks’ approval.

Craig Williams, president and CEO of LMC's parent company Equinox Minerals, welcomes the opportunity for growth provided by the refinancing: “The provision of this loan facility by a core group of international commercial banks is the recognition of the strength of the Lumwana copper mine.”

“Refinancing our existing project debt facilities with a corporate loan reflects our transition from a developer to an operator of a world-class mining asset. Our company will benefit from the increased flexibility in the structure of this facility and is now very well placed to move to the next phase of its growth.”

ICBC’s inclusion in the deal has been hailed by Norton Rose, the deal’s legal advisors, as a further example of China’s appetite for investment into African mining deals.

According to Norton Rose, these terms represent a much more traditional refinancing structure rather than the other, more novel, structures that have been used recently to refinance debt, an indication that liquidity is returning to the banking market.

Martin McCann, banking partner at Norton Rose, comments: “This is a fantastic deal. We have taken them from their earliest stage and have now refinanced their debt into that more akin to a mature operational mining business. The sky is the limit for this business and the sector looks very active over the next six months.”