Fortescue Metals Group (ASX:FMG) has managed to line up a $2.06 billion bank loan facility to help its expansion plans. Shares in the third largest iron ore miner in Australia closed at a high of $6.25, up 7.76% after the announcement on Monday.
The refinancing had been delayed in May/June due to the uncertainty about the federal government’s proposed mining tax. The refinancing involved the replacement of Fortescue’s project based secured notes with a corporate banking facility from JP Morgan and Royal Bank of Scotland.
The original notes issued in August 2006 helped to fund Fortescue’s initial development in the Pilbara at the Chichester production hub. The company will now be able to fund expansions of its Cloudbreak and Christmas Creek mines as well as the development of the Solomon project and a second port in the Pilbara region as per Andrew Forrest.
The refinancing also helps Fortescue save $60 million annually thanks to lower interest costs. While the company will now be allowed to pay dividends Mr Forrest said that it was more likely to pour its cash flow back into expanding infrastructure, mines and building market share offshore.
Fortescue has firmly established itself as one of the world's largest producers and sea-borne traders of iron ore.