Herald says due diligence on N. Sumatra zinc/lead project commenced

Australian miner Herald Resources NL. Said on Monday the consortium of banks led by Macquaire Bank mandated to provide senior financing for its Dairi zinc/lead project in North Sumatra had commenced due diligence on the project.

The process, said Herad in its quarterly report, had been very comprehensive longer than expected, but, the Macquarie had indicated a final terms sheet, following which final credit approval would be sought , would be completed in November.

Herad also said that during the third quarter of 2005, formal request for offer of subordinate finance and/or concentrate offtake agreements were also sought from a number of smelters and trading groups.

?Present indication received suggest that the company should be able to negotiate favorable offtake agreements, as the availability of zinc concentrates is predicted to remain tight in the foreseeable future,? said the company.

Herald, together with 20 percent partner PT. Aneka Tambang Tbk. is planning to develop Dairi zinc/lead project to process 1 MTPA of ore, producing 220,000 and 100,000 tonnes of zinc and lead concentrates PA.

Revised Feasibility Study (RFS) conducted by third party suggested total capital costs of US$ 118 million. Under the RFS, the company would truck its concentrate to the East coast of Sumatra port of Kuala Tanjung, where the 40,000 tons concentrate store would be built together with direct ship-loading jetty.

The company also said it had awarded Preliminary Engineering work contract to Ausenco Limited in July 2005, with scope of work focused on finalizing plant lay-outs and progressing key procurement and contract tenders to the point of award. The company said it remained committed to commence constriction in the first quarter of next year. ?Proforma tendering documents had been issued to several prospective contactors for the underground mine which is designed to produce 1 million tons of ore per year. (alex)