Costs escalate for Compass
Kristie Batten
Mining Net News
COMPASS Resources is facing further cost blow-outs at the already delayed Browns Oxide base metals project in the Northern Territory.
The company has announced the revised capital cost for the plant construction is $A175 million plus $40 million for first fills, pre-production operating costs and owners’ costs.
This comes after the capital cost for plant production was revised in December, the third increase in 2007.
In May 2007 capital costs were estimated to be $83 million plus $21 million; in October it was revised to $106 million plus $28 million; and in December it was upgraded again to $140 million plus $32 million.
To fund the increased cost, Compass has secured a loan from Coffee House Group, which is linked to Gordon Toll, a Compass non-executive director.
The loan facility is for up to $US24 million ($A24.6 million) at an interest rate of 10% per annum compounding daily with a drawdown fee of 1.5% and a loan establishment fee of 2%.
The plant was commissioned in late May after its original scheduled first production was due in December.
Delays in commissioning the project have been blamed on a number of factors, including flawed construction and management procedures, power supply problems, and bad weather.
The additional construction time also was a major factor in the cost increases.
Compass said hand-over of the plant from the commissioning team to the operations team will begin in late July, while hand-over of the final sections of the plant will be completed in the first half of August.
First production of nickel and cobalt is scheduled for the second half of August, while first production of copper cathode is due in the second half of September.
Compass shares were down 3.5c today to $1.59.
The company has announced the revised capital cost for the plant construction is $A175 million plus $40 million for first fills, pre-production operating costs and owners’ costs.
This comes after the capital cost for plant production was revised in December, the third increase in 2007.
In May 2007 capital costs were estimated to be $83 million plus $21 million; in October it was revised to $106 million plus $28 million; and in December it was upgraded again to $140 million plus $32 million.
To fund the increased cost, Compass has secured a loan from Coffee House Group, which is linked to Gordon Toll, a Compass non-executive director.
The loan facility is for up to $US24 million ($A24.6 million) at an interest rate of 10% per annum compounding daily with a drawdown fee of 1.5% and a loan establishment fee of 2%.
The plant was commissioned in late May after its original scheduled first production was due in December.
Delays in commissioning the project have been blamed on a number of factors, including flawed construction and management procedures, power supply problems, and bad weather.
The additional construction time also was a major factor in the cost increases.
Compass said hand-over of the plant from the commissioning team to the operations team will begin in late July, while hand-over of the final sections of the plant will be completed in the first half of August.
First production of nickel and cobalt is scheduled for the second half of August, while first production of copper cathode is due in the second half of September.
Compass shares were down 3.5c today to $1.59.