Analysts are pleased to see Equinox Minerals Ltd. (OTC:EQXMF) restructure its debt repayment schedule so that it is not so onerous this year.
The company announced on Friday that it struck a deal with lenders to "smooth" repayments over the life of the loans that it took on to build the Lumwana mine in Zambia. The result is that repayments for 2009 were reduced to $138.4-million. Analysts estimated that they were previously about $185-million. The cost is an additional 50 basis points on the debt facilities.
Greg Barnes, an analyst at TD Newcrest, said this restructuring gives the company more financial flexibility during the ramp-up of Lumwana this year.
"We expect that the company should generate sufficient cash flows to meet its debt obligations and build on its cash balance for 2009," he wrote in a note to clients.
Analyst Tom Meyer at Raymond James called the announcement "further evidence of management's ability to maximize shareholder value." He noted that Equinox shares have lagged the copper price recently, and one possible reason is concern about its ability to repay its debt obligations. But this announcement should ease those fears, he wrote.
"Our site visit in February confirmed the positive progress of the Lumwana ramp-up during a particularly wet rainy season and as such, we have held a much more optimistic view of the company's ability to cover its liabilities than the market has."