Saudi Arabia’s Riyad Bank and Germany’s WestLB have begun approaching banks about financing the debt tranche of the country’s first private mining project.

Australia’s Citadel Resources and the local Construction Material Chemical are planning a $300m project to develop the Jabal Sayid copper and gold mine, in the centre of the country.

Banks have received an initial approach from the two financial advisers about providing debt funding of about $180m.

Sources in the kingdom say Saudi and international banks have been approached about the scheme. Three local banks have confirmed their willingness to provide finance.

Once interest from banks has been confirmed, more detailed talks about financing terms will begin, says a Saudi Arabian banker.

The funding raised from the banks will be used to cover the initial development costs of the mine, but Citadel is keen to put together a banking group that could continue to fund further development of the project.

Riyad Bank and WestLB were appointed as financial advisers on the project in August 2009 (MEED 25:8:09).

Citadel and the Construction Material Chemical Industries own 50 per cent of the project.

Citadel estimates the mine holds 1 million tonnes of copper and 440,000 tonnes of zinc. It should start production in 2011.