CBH to reduce debt in ‘company transforming’ deal with Toho Zinc
Wednesday January 27, 2010
CBH Resources will reduce its debt by more than 80 per cent following a $67.5million “company transforming” agreement with its major shareholder Toho Zinc.
CBH will sell a 50 per cent ownership stake in its Rasp Mine at Broken Hill for $57.5million, as well as raising $10million through the placement of 50million shares to Toho, potentially increasing its share stake in CBH up to 31.8 per cent.
CBH managing director Stephen Dennis said the transaction will stand the company in a much better position.
“This transaction with Toho, our major shareholder, provides the impetus to bring Rasp into production at the earliest opportunity, transforming CBH into a leading zinc and lead producer with cash flow from two producing mines,” Mr Dennis said.
Under the agreement, which is still subject to final approval, CBH will use the funds from Toho to buy back all its outstanding convertible notes, reducing its interest bearing debt by more than 80 per cent.
CBH’s board of directors has endorsed the transaction with final approval from shareholders to be sought at a meeting in March.
The transaction is expected to free up cash for Cobar’s Endeavor Mine, and will also boost the Broken Hill economy.
Toho has agreed to provide support to CBH in securing debt funding for the development of Rasp, significantly de-risking the path to production,” Mr Dennis said.
“CBH will be the operator of the joint venture and Toho will purchase all zinc and lead concentrates produced by Rasp for life of mine, reflecting the same principles under which Toho currently purchases all zinc concentrates from CBH’s Endeavor Mine.”
First production at Rasp is expected this year, with a mine life up to at least 2026 and employing around 150 people.
“These transactions will create significant value for CBH shareholders, by identifying
and securing a clear development path for Rasp.
“Toho has again showed its strong support for CBH and we greatly look forward to further strengthening our relationship as the new joint venture is established,” Mr Dennis said.
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