Nyrstar announced it has signed an implementation agreement with the Australian Export Finance and Insurance Corporation (EFIC) with respect to EFIC’s supported trance of the funding package for the proposed transformation of the Port Pirie smelter into an advanced recovery centre.
As a reminder, Nyrstar reached an agreement in principle on 3 December 2012 with the Australian Federal Government and the South Australian Government with respect to the funding of the transformation. Total capital expenditure is estimated at around A$ 350m to be financed by a funding package comprising A$ 100m investment from Nyrstar, A$ 100m via forward sale of incremental free metal from Port Pirie and A$ 150m via structured investment to third party investors, backed by a guarantee from EFIC.
The implementation agreement with EFIC is another important milestone in the funding of the Port Pirie transformation. Also recall that in the 1Q13 trading update, Nyrstar announced it had sold forward to February 2014 5.0m oz of silver at approximately US$ 28/oz, which would be rolled into the A$ 100m forward sale component of the funding package.
The transformation is to turn Port Pirie into an advanced poly-metallic processing and recovery centre capable of processing a wider range of high margin metal bearing feed materials, including internal residues from Nyrstar’s own smelting operations as well as other complex waste streams containing precious and other non-ferrous metals.
The project is expected to generate returns and margins exceeding the company’s investment targets for mining acquisitions, comparable to what is generated in the advanced materials processing sector. Next to processing by-products and residues from Nyrstar’s own platform, the Port Pirie smelter might be well located to source secondary materials from the wider Australasia region.