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Sierra Rutile Ltd (SRX)

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Friday 11 March, 2011

Sierra Rutile Ltd

Early repayment of ?13.0 million of debt to GOSL

RNS Number : 7598C
Sierra Rutile Limited
11 March 2011
 

SRX:AIM

 

 

 

Sierra Rutile Limited

 

Early repayment of €13.0 million of debt to Government of Sierra Leone

 

Sierra Rutile Limited announces that, following its successful £11.4 million (US$ 18.3 million) equity placing, it has made a partial repayment of €13.0 million (US$18.0 million) of its subsidiary's loan from the Government of Sierra Leone.

 

As a result of the repayment, Sierra Rutile is now well positioned to further the development of its business as it continues its strategic review, designed to substantially increase production and derive full benefit from all minerals in its production stream. Furthermore, the repayment ahead of schedule reflects the company's commitment to good corporate citizenship and to its relationship with the Government and country of Sierra Leone.

 

An agreement has been reached with the Government of Sierra Leone such that the next principal repayment on the loan will be in June 2013. Subsequently the interest repayments in 2012 will now be lower by €0.7 million (US$1.0 million).

 

The equity placing and early repayment has also significantly improved the financial position of the Company. Sierra Rutile is now well-capitalized, with net debt at less than US$10.0 million, and gearing1 at approximately 5%2.

 

This financial flexibility positions Sierra Rutile well as it continues to develop its business in Sierra Leone. As part of its ongoing strategic review, Sierra Rutile is evaluating options for the improvement of its operational performance and is assessing the potential to extract rare earths from its mine tailings.

 

The loan was taken out for the restart of Sierra Rutile's mine in 2005 and was funded under a European Commission programme. €23.7 million (US$32.7 million) of principle remains due on the loan.

 

John Sisay, Chief Executive Officer commented:

 

"The early repayment is good news for both Sierra Rutile and the Government of Sierra Leone. I believe it underlines Sierra Rutile's commitment to the country and its people. The financial flexibility we now have positions us well as we continue to execute our strategic review. The mineral sands market remains strong with a positive outlook and I look forward to updating shareholders in due course on our progress."

 

__________________

1 Gearing defined as net debt divided by market capitalization

2 Market capitalization at close on 9 March 2011

 

March 11, 2011

 

ENDS

 

Contacts:

 

Sierra Rutile Limited

John Sisay, Chief Executive

Telephone: +44 (0) 207 321 0000

 

Arbuthnot Securities

Nominated Adviser & Joint Broker

Hugh Field / Richard Johnson

Telephone: +44 (0) 20 7012 2000

 

Mirabaud Securities LLP

Joint Broker

Peter Krens

Telephone: +44 (0) 20 7321 2508

 

Aura Financial

Andy Mills / Harry Cameron

Telephone: +44 (0) 207 321 0000


This information is provided by RNS
The company news service from the London Stock Exchange
 
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