Penoles Plots Debt Refi

Penoles, the Mexican mining giant, plans to restructure about $550m in long-term debt in order to better position its books for a spin off of Fresnillo. It aims to sell new debt in order to repay an 8.39% of 2012 structured silver payable notes issue and other senior unsecured debt. The IPO will result in significant cash in-flows to Penoles, which will also get MXP4.26bn from the precious metals business through a combination of a dividend and a capital reduction. Part of this may be distributed to Penoles’ shareholders depending on cashflow needs. CEO Jaime Lomelin, vp of mining and chemicals Manuel Luevanos, CFO Mario Arreguin, and vp of exploration David Giles will step down from their posts at Penoles and become CEO, COO, CFO and vp of exploration, respectively at Fresnillo, Penoles says. “Penoles will retain between 75% and 77.3% of the ordinary shares of Fresnillo plc depending on whether the over-allotment option is exercised or not. In doing so, Penoles expects to create value for its shareholders and personnel and for Mexico,” says the issuer. The other unit of the firm, Minas Penoles will focus on non-precious metals business. A listing without float will also be obtained on the Mexican Stock Exchange for Fresnillo. As of December 2007, Penoles says Fresnillo mines, development projects and exploration prospects had 291.1m tons of attributable mineral resources yielding 837.0m ounces of silver and 9.4m ounces of gold.