A UK£5 million loan facility from Galena Special Situations Master Fund, part of the Trafigura group, has helped Van Dieman Mines narrowly avoid insolvency. VDM announced in mid-May that it had changed its plans to develop two tin mine projects in Tasmania and the company has also experienced some turnover of senior executives. The deal with Galena will make it a “Strategic Investor”, holding loan notes which it can subsequently convert into an increased equity stake. Galena currently holds 12% of VDM, but could increase this to 33.5%. Galena is also an investor in the South Crofty tin project in the UK, via Western United Mines.
In a statement released today, VDM said that “as a result of the need to seek further funding the Company’s projects at both Scotia and Endurance are further delayed. It is expected that commissioning of the Scotia project will commence in September 2008 and production at the Endurance project is now expected to commence in the second quarter of 2009.” The Scotia project will have an annual capacity of 700 tpy of tin-in-concentrate and the Endurance one will be slightly smaller.
Mike Etheridge, the company’s Non-Executive Chairman, commented: “Galena’s investment decision was made under uncertain and difficult conditions and at short notice, and is a vote of confidence in the Company’s projects and prospects. It ensures the necessary funding to undertake the critical trial mining, dewatering, plant modification and confirmatory drilling work to determine project feasibility.”
