Armada secures funds for Erdmin project

Armada Gold (AAU-T) has secured financing to continue its expansion of the Erdmin copper plant in Mongolia.

The second phase of the expansion is designed to boost daily copper output to 60 from 10 tonnes, equivalent to 22,000 tonnes of copper cathode per year.

Armada holds a 49% interest in the operation, which produces copper by means of solvent extraction-electrowinning. The remainder is held by state-owned Erdenet Concern.

The 70-to-30 debt-to-equity financing will be provided by the Japanese trading company Marubeni, which has been buying Erdmin copper since February 1997. Marubeni also provided financing for the first phase of expansion.

The arrangement is subject to a feasibility study, to be carried out by the Japanese engineering firm Chiyoda in partnership with Kilborn-KCMP of Perth, Australia. Marubeni will pay for most of the study.

KCMP will be responsible for the project’s engineering design and will serve as subcontractor to Chiyoda during construction.

The agreement with Marubeni is based on copper sales at London Metal Exchange prices. Should Erdmin decide to develop the project without Marubeni and Chiyoda, Marubeni will be reimbursed for all expenses incurred in completing the feasibility study.

The study is expected to be completed by May 1998, with construction possibly beginning in July 1998 and lasting about 15 months.