June 30, 2017 / 3:59 PM / a year ago

BRIEF-Polish copper producer KGHM says Sierra Gorda loan to be modified

WARSAW, June 30 (Reuters) - Polish copper producer KGHM said on Friday that conditions attached to a $1 billion loan signed in 2012 by its Chilean mine Sierra Gorda will be changed.

* The changes include replacing the project finance formula with a corporate loan, which will "significantly reduce Sierra Gorda limitations and obligations" and give the mine more financial flexibility, KGHM said.

* State-run KGHM gained control over Sierra Gorda in 2011 when it bought Canada's Quadra FNX, for C$2.87 billion ($2.21 billion)in the largest-ever foreign acquisition by a Polish company.

* To finance development of its business Sierra Gorda secured in 2012 a $1 billion loan for 9.5 years in a project finance formula with the Japan Bank for International Cooperation and four other Japanese private banks.

* Sierra Gorda failed to meet some of the production targets and fulfilling the project finance conditions became a challenge.

* KGHM also said that the guarantees provided by Japan's Sumitomo Metal Mining and Sumitomo Corporation - KGHM's partners in Sierra Gorda - will be maintained until June 2021.

* KGHM said that the loan value as of June 30 was around $760 million. ($1 = 1.2987 Canadian dollars) (Reporting by Agnieszka Barteczko; Editing by Susan Fenton)

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