Romarco extends key contracts
TORONTO, June 14, 2012 /PRNewswire/ - ROMARCO MINERALS INC. (TSX: R) (the "Company") is pleased to announce that in light of the recently announced permit schedule, it has renegotiated a number of key contracts to re-align equipment deliveries for the development of the Haile Gold Mine. These activities are part of an overall Company strategy for managing cash according to the new permit schedule.
Romarco's Caterpillar ("CAT") mobile mine equipment for its Haile Gold Mine project in South Carolina is currently being held in inventory by the local CAT dealer, Blanchard Machinery Company ("BMC"). BMC will deliver the CAT equipment that was previously targeted for delivery by March 31, 2013 on a revised schedule aligned with the expected start of construction. For BMC to maintain the inventory over the extended schedule, the Company will incur an additional $30,000/month, bringing the total monthly holding cost to approximately $230,000. This agreement maintains the previously agreed pricing, ensures timely delivery of new equipment with tires, and allows the Company to defer the majority of the payment, approximately $29 million, until the earlier of September 30, 2013 or when the equipment is delivered to Haile.
Romarco has agreed with the local Hitachi shovel dealer, Flint Holdings ("FH") to align delivery with the expected start of construction. FH anticipates receiving the shovel in December 2012 and will maintain the shovel in its inventory until delivered to Haile. At that time, the Company will pay FH a montly holding cost of approximately $11,000 and make monthly down payment installments of approximately $43,000. This agreement maintains the previously agreed pricing, ensures timely delivery of the shovel, and allows the Company to defer the majority of the payment, approximately $2.5 million, until the equipment is delivered to Haile.
The manufacturer of the SAG and secondary Ball grinding mills has indicated it will re-align delivery and final payments by three to six months. This will defer the approximate $5 million final payment over the first and second quarters of 2013.
The Company is advancing detail design engineering with a target to be 75 percent complete by the end of 2012. Equipment specification and design that is critical for advancing engineering is being identified and manufacturers are being selected. Romarco is purchasing the engineering necessary for continuing design. The equipment will be released for manufacture on a time line that coincides with project construction. This process allows significant flexibility while minimizing cash expenditures and maintaining the project timeline.
Diane R. Garrett, President and CEO commented: "By realigning our equipment payments to coincide with the EIS schedule, we have maintained our financial flexibility while ensuring we will have our mobile mining fleet available when we are ready to start construction and mine development. We are extremely pleased with the support we have received from our equipment suppliers. The Company has engaged in a number of cash conservation measures and will continue to do so in order to preserve its treasury. The largest expenditures the Company currently has are in the areas of permitting and engineering. Both of these activities are vitally important to adding value to the Haile project and positioning the Company for development activities. These expenditures will be significantly reduced by the end of this year as key milestones will have been completed."
Barclays Bank PLC
Based on the US Army Corps of Engineers' schedule for completing the EIS, the Company has extended its agreement with its financial adviser, Barclays Bank PLC ("Barclays"), through the end of 2013 with the aim of securing project debt financing for up to 60% of the funds needed to construct and commission Haile's future mining and processing operations. Barclays' selected engineering firm, Pincock, Allen and Holt ("PAH") has completed its initial independent review and technical audit of the Haile project's feasibility work.
Matthew Lewis of Barclays stated: "We are extremely satisfied with the initial technical review, which has confirmed that Haile is a quality gold mine project. Haile is a relatively low capital cost, low operating cost, and high-grade gold development project in a politically stable jurisdiction. As adviser to the Company, we have received significant interest from financial institutions regarding a potential debt financing for Haile."
All dollar amounts in this news release are expressed in U.S. dollars.
About Romarco Minerals Inc.
Romarco Minerals Inc. is a gold development company focused on production primarily in the US. The Company has completed a positive Feasibility study and is continuing exploration drilling and permitting for its flagship project, the Haile Gold Mine in South Carolina.
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