fyi">> Frustrated Herald awaits financing>> Michael Quinn>...

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">
> Frustrated Herald awaits financing
>
> Michael Quinn
> Wednesday, February 01, 2006
>
>
> MIX inherent bank conservatism, the heavy demand for consultants,
> a proposed large underground mine with a "fairly loose" hanging wall,
> plus a soaring zinc price and what you end up with is the very
> frustrated owner of the Dairi zinc-lead project in Indonesia: Herald
> Resources.
>
>
>
> Dairi location map
>
> The company said earlier this week it had been "led to believe a
> terms
>
> sheet for finance facilities [would] be forthcoming" this month for
> its Dairi zinc-lead project in Indonesia.
>
> The financing has dragged on for some time, with the company
> saying in
>
> a presentation 12 months ago it was aiming to "finalise discussions"
> with banks and offtake parties. A syndicate lead by Macquarie Bank and
> comprising
>
> HVB, Standard Bank and RMB was subsequently mandated last June.
>
> Herald managing director Terry Allen told MiningNews.net the due
> diligence carried out by Macquarie's consultants RSG took 2-3 months
> longer than hoped.
>
> He said the delay was a probably caused by the high demand for
> consultants in the sector generally, combined with extended assessment
> of the proposed one million tonne per annum Dairi mine - a
> "complicated" mine because of "a fairly loose hanging wall".
>
> This resulted in a large number of meetings between Herald's
> mining consultant, Australian Mining Consultants, and RSG. (Herald
> used Ausenco for
>
> the processing aspect of the feasibility study).
>
> Meantime, Herald has highlighted the significant impact the
> current zinc and lead prices have on the economics of the project,
> with post-tax cash flow (after repayment of $US118 million in capital)
> rising from the
> $US202 million calculated last August using a zinc price of US57c/lb
> and a lead price of 39c/lb, to $US583 million currently - after
> repayment of
> $US133 million capital.
>
> Earlier this week zinc was fetching $US1.04/lb and lead US59c/lb.
>
> The project's NPV (using a 10% discount) over the same timeframe
> has gone from $US73 million post tax to $US279 million.
>
> Dairi is pegged to annually produce around 120,000t of contained
> zinc in concentrate and 65,000t of contained lead in concentrate. Cash
> costs have
>
> been put at US41c/lb zinc produced.
>
> Herald's market capitalisation has doubled in the past month to
> around
>
> $A100 million."
Tas, the negatives expressed sound like your comments last year, minus