LAF lafayette mining limited

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    Lafayette gets its ducks lined up
    Michael Quinn ..
    08 May 2003
    LAFAYETTE Mining is in the home straight as its bankers complete due diligence on the US$40 million plus Rapu Rapu polymetallic project in the Philippines ahead of construction beginning in June.

    Consultants Ausenco and RSG are carrying out the due diligence for Standard Bank and Macquarie Bank, which have previously indicated they will lend Lafayette US$30 million. The four-week due diligence process is due to be completed this month.

    Should that amount remain unchanged, and Lafayette chief executive Andrew McIlwain sees no reason why it won't, further debt or equity raisings will not be needed given Lafayette also has US$10 million coming its way from off-take and 26.04% equity partners LG International Corp of Korea and KORES.

    The capital cost of the project is put at US$43 million, but McIlain told MiningNews.net a secondhand gold price already identified should reduce the amount needed by around US$2 million.

    Leighton Contractors is building the plant and doing the mining.

    Other savings are being targeted and Lafayette also had cash at quarter's end of $2.38 million.

    Rapu Rapu is an opencut mining project producing gold, copper, zinc and silver that takes its name from the central Philippines island on which it's located.

    Annual production is put at around 10,000t of copper, 50,000oz of gold, 14,000t of zinc and 580,000oz of silver beginning in the second half of 2004.

    Total unit costs were put at under US$220/oz of gold, and less than US50cents/lb of copper and US15cents/lb of zinc - after by product revenues.

    Costs were calculated on prices of US75 cents/lb of copper, US$325/oz of gold, US35 cents/lb of zinc and US$4.40/lb of silver.

    The project has an NPV of $48 million - compared to Lafayette's current market capitalisation of $25.5 million - an IRR of 28% and project payback of less than two years.

    Asked to flag the biggest risk to the project, McIlwain nominated commodity prices.

    Lafayette shares closed up 0.2 cents today at 8.4 cents.

    The company's main shareholders are Lion Selection with 32.6% and Bell Potter Nominees with 14.1%.
 
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