* Expects $7 bln financing to close by yr-end - CEO
* To raise gold output to 500,000 ounces by 2017
DAMMAM, Saudi Arabia, Nov 13 (Reuters) - Saudi ArabianMining Company (Ma'aden) aims to close fundraising forits $7 billion phosphate project before the end of the year, andtalks with lenders are progressing well, its chief executivesaid.
The cash will be used to fund the Umm Wual development atWaad Al-Shimal City in the north of the country, as well asconnected infrastructure at Ras Al Khair on the east coast ofthe kingdom.
The project is a joint venture, with Ma'aden holding amajority stake and Saudi Basic Industries Corp andMosaic 15 and 25 percent, respectively.
Local and foreign commercial banks have been approached forthe financing, as well as two Saudi government funds - the SaudiIndustrial Development Fund and Public Investment Fund - andexport credit agencies (ECAs), including ones from South Korea,Khalid al-Mudaifer said late on Tuesday on the sidelines of anindustry event in Dammam.
"There is big progress and hopefully we will finalise itbefore the year ends," Mudaifer said, adding that it was in theprocess of receiving commitments.
Project Finance International, a Thomson Reuters unit,reported last month that commercial banks would be asked tocommit around $3.1 billion, with around $1.9 billion to comefrom the two Saudi state funds and the rest from ECAs.
A banker with knowledge of the deal said on Wednesday thatthe tranche of cash earmarked for commercial banks would likelybe "significantly oversubscribed".
Mudaifer said Ma'aden expects to raise its gold productionto 500,000 ounces per year by 2017, up from just over 137,000ounces in 2012, despite a slide in gold prices.
"When it comes to gold prices, they went down but are stillgood for our investments," he said.
"The cost of resources and extraction in Saudi of ourprojects are all very low so we do not have a decrease and sothey are still feasible."
In October, Ma'aden said its third-quarter net profit morethan trebled on the back of contract receipts from a phosphatejoint venture, which helped offset declines in its gold andother fertilizer businesses.
But it was the second successive quarter that the company'searnings has suffered from lower gold prices.
Spot gold prices have fallen from highs of nearly$1,800 an ounce in early October 2012 to around $1,270 onWednesday.
Ma'aden has said previously it expects to significantlyincrease its gold production over the medium-term as new minesare brought into production and the life of existing mines isextended.
In the Mecca region, the new As Suq and Ad Duwayhi mines areexpected to be in commercial production by 2015.
- Commodity Markets
- gold prices
- Ras Al Khair