The board of nickel producer Societe Le Nickel has unanimously approved the conditions for a Eur200 million ($222 million) loan deal proposed by the French government, parent company Eramet said Tuesday.
SLN "is now in a position to conclude the Eur200 million loan agreement with the special agency for managing French government holdings (Agence des Participations de l'Etat- APE)," Eramet said.
The eight-year-long loan will bear interest at a minimum rate of 4% which will be supplemented by progressive remuneration indexed to the EBITDA margin.
The conditions for Eramet's financial contribution -- the company owns a 56% stake in SLN -- will be similar to the loan conditions proposed by the French government and adapted accordingly, it said.
The conditions for Eramet's financial contribution will be submitted for approval to the company's board meeting on July 27.
SLN operates six mines and the Doniambo metallurgical plant in New Caledonia, producing ferronickel and nickel matte. The company produced 53,369 mt of nickel in ferronickel and matte in 2015.
Eramet's nickel operations, which also include the Sandouville refinery in France and the PT Weda Bay Nickel hydrometallurgical project in Indonesia, posted an operating loss of Eur261 million last year, hit by sliding nickel prices which fell 42% from end-2014 to end-2015, hitting 12-year lows in the process.
In May, Eramet's board approved a cost reduction and productivity improvement plan for SLN with a top priority of rapidly reducing production costs to $4.50/lb by end-2017 at an annual rate on the basis of the economic conditions of early 2016. This represents a 25% decrease compared with the 2015 average.
The loan deal "reinforces the commitment of all of SLN's teams to implement and succeed in its company performance plan with an objective to lower cash production costs by 25% by end-2017," Pierre Gugliermina, chairman of SLN's board of directors, said Tuesday.
