Advanced discussions also are underway with a number of trading or offtake parties to secure additional funding for Vista and finalise coal marketing arrangements.
The facility, combined with anticipated additional funding, will give Coalspur the funds needed to start production at Vista, provide working capital and repay the outstanding loan facility with the Highland Park Group.
Coalspur expects the funding and offtake agreements to be executed and effective by the end of the first quarter of 2013.
President and chief executive officer Gill Winckler said the EIG deal was a significant milestone for Coalspur as it provided certainty of funding for the initial development capital of Vista and enabled the company to maintain its development timeline.
“Our ability to secure a significant portion of funding for Vista, at competitive terms in a difficult market, is testament to the quality of our project,” he said.
The EIG facility has an eight-year term with a cash coupon of 8% per annum and with principal capitalising at 3% per annum.
Coalspur can pay the additional 3% rather than having it capitalise.
The facility is subject to a number of conditions including completion of confirmatory due diligence and documentation being entered into.
EIG will be granted 100 million warrants to purchase Coalspur shares.
On the Vista front, Coalspur is advancing the detailed engineering studies for the project, the definitive transport agreement with railroader CN, the requirements for the regulatory approval process and other activities that will let it start construction in 2013.
On December 14, Coalspur entered into a binding agreement with CN that outlined the key terms for a definitive rail transport agreement.
The agreement will have a seven-year term starting in 2013.
CN will supply the equipment to move coal from Vista to tidewater and there will be no take or pay exposure for Coalspur.
The haulage rates and price escalation agreed with CN are down significantly on rates quoted in the Vista feasibility study.
As a result of the CN agreement, Coalspur’s logistics costs, which include port handling charges at Ridley Terminals, and haulage rates with CN are contractually defined until 2020.
Logistics make up about 50% of Coalspur’s projected free on board costs.
The logistics costs for Vista average $C30.81 ($US31) per tonne over the first five years of production and $C31.40 per tonne at full production of 12 million tonnes per annum.
The costs are $C1.88/t and $C2.29/t lower than estimated in the feasibility.
This means the finalised terms with CN reduces Vista’s projected total FOB operating costs to $C56.98/t in the first five years, $C59.55/t in the first 10 years and $C66.40/t over the life of the mine.
Detailed engineering studies for the project are ongoing. The company is preparing for civil earthworks and mine predevelopment work to start in the second quarter of 2013.
Initial bid packages for the load-out area, rail siding grading and drainage, access roads, plant site grading, surface water management and haul roads have been issued to prequalified contractors.
Firm bids for those works are expected in 2013.
Selection of process equipment, including crushing, wash plant and load-out facilities to handle up to 3Mtpa is substantially complete. Letters of intent or purchase orders have been issued to the selected vendors to receive engineering drawings for the detailed design of the process plant.
This will allow the plant structural and foundational design to be completed in early 2013.
A decision over the use of a mining contractor for the initial years of operation will be made in early 2013 as final bid submissions from contractors are received and the Vista funding is finalised.
The company remains on track with its regulatory approval process.
It is working with the town of Hinton as well as aboriginal groups. Indeed, an agreement with one of the main groups setting out the terms of ongoing cooperation and collaboration between the parties has been reached.
