LONDON (Alliance News) - Talvivaara Mining Company PLC Tuesday said it has entered into a loan and sales agreement with Nyrstar Sales and Marketing AG.
The base metals producer with operations in Finland said Nystar will make available to Talvivaara a loan facility up to maximum of EUR20 million available in several tranches.
The company said the amount of each tranche would be directly linked to the delivery, by Talvivaara's subsidiary Talvivaara Sotkamo Ltd, of zinc in concentrate to Nyrstar.
Talvivaara said the agreement addresses Talvivaara's current financing needs and reduces its overall funding gap.
It said in January that it planned to reorganise its operations to save cash after getting into financial difficulty due to a sharp decline in the price of nickel early in 2013, and after its lenders declined to finance a restructuring on its own.
The company said last week that in the absence of funding, its liquidity situation remains critical.
The company said that once the deal goes through, Talvivaara also will have the option to enter into a streaming holiday for delivery of up to 80,000 tonnes of zinc in concentrate.
Nystar will purchase zinc concentrate from Talvivaara at market terms in return for the value-sharing mechanism of the original agreement being amended to reduce on a pro rata basis.
Having entered into the Loan and Streaming Holiday Agreement with Nyrstar, Talvivaara will immediately deliver Nyrstar approximately 10,000 tonnes of zinc in concentrate and receive the first loan advancement of approximately EUR5 million.
Talvivaara shares were up 46.6% to 5.41 pence Tuesday.
By Tom McIvor; tommcivor@alliancenews.com; @TomMcIvor1
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