Brisbane’s Metro Mining Ltd announced yesterday the completion of an A$40 million (US$30.17 million) debt-financing facility in order to fund the continuing development of its Bauxite Hills Mine.
According to the firm, financiers of the deal are Sprott Private Resource Lending (who will act as the deal’s senior secured lender) and Ingatatus AG Pty Ltd, which is a related party to Metro Mining’s major shareholder Balanced Property. Metro Mining said that the global tender process yielded competitive offers from several lenders, but Sprott and Ingatatus were ultimately awarded the deal due to low costs, minimal shareholder dilution, relatively few covenants, and flexibility as it relates to early payment.
The deal consists of a three-year tenor with an “attractive” annual interest rate, and no principal amortization until 2019. A A$20-million (US$15.1 million) payment will be due at the loan’s completion, and the loan features no commitment fees, no hedging requirements, and minimal cash reserving. Also of note is the deal’s lack of a mandatory cash sweep, a minuscule number of Metro options and a strike price reflecting a 25% premium to Metro’s share price.
The deal in question replace a A$15 million (US$11.3 million) short-term debt facility with Namrong Pty Ltd, who is also a related party to Balanced Property. Assuming all due diligence and regulatory hurdles are cleared in a timely fashion, Metro foresees the deal in question to be in place by early next quarter.
“We are very pleased to have secured a highly competitive and flexible debt facility led by Sprott, one of the world’s leading providers of finance to the natural resource sector,” opined Metro Mining’s managing director Simon Finnis. “We are also very pleased to maintain the ongoing support from our long term cornerstone shareholder Balanced Property. This debt financing represents another significant milestone and funding component for Metro and will allow the Company to continue its rapid development of the Bauxite Hills Mine.”
“As one of the leading investors dedicated to the natural resource sector, Sprott is excited to partner with Metro Mining to develop the Bauxite Hills Mine,” declared Narinder Nagra, Sprott’s managing partner. “We look forward to working with the management team on one of the premier development assets in Australia.”