JOHANNESBURG (miningweekly.com) – London-listed African Minerals has arranged $868-million in financing for the continued expansion at its Tonkolili iron-ore project in Sierra Leone.
The company said on Tuesday it had successfully closed the book and pricing of $350-million of convertible bonds due 2017. African Minerals also received credit approval for $518-million from Standard Bank to refinance existing debt facilities.
Executive chairperson Frank Timis said the $868-million finance package would provide African Minerals with the funding required to accelerate continued expansion of production at its Phase I Tonkolili operation to 20-million tons a year so as to maintain the current momentum in the project and benefit from favourable commodity markets.
The bonds would be issued at par, priced with a coupon of 8.5% payable semi-annually in arrear and be convertible into the company’s’ fully paid ordinary shares.
The bond conversion price was set at $10.98, equivalent to £7 as per the pound/dollar exchange rate on January 30.
Based on the issue size of $350-million, the ordinary shares to be issued upon conversion of the bonds would represent about 32-million ordinary shares or 9.7% of African Minerals’ current total number of issued and outstanding ordinary shares.
The company would also offer State-owned China Railway Materials Commercial Corporation the right to an additional 12.5% of the issued amount.
If not converted or previously redeemed by the closing date, which was expected to be around February 10, African Minerals would have the option to call the bonds at 110% of par at 36 months after the closing date.
Further, the bonds would be redeemed at par five years from the closing date when it reached maturity, while the company would also have the right to redeem the bonds if at any time the aggregate principal amount of the bonds outstanding was equal to or less than 15% of the aggregate principal amount of the bonds initially issued.
Meanwhile, Standard Bank confirmed that credit committee approval had been received for a refinancing package for $518-million. The refinancing would be used to redeem the existing secured loan facility prior to its anniversary date and continue the existing $100-million Standard Bank standby facility.
Completion of the refinancing package was subject to satisfaction of customary conditions precedent.
"We are pleased to refinance the secured loan facility with a more attractively priced and more flexible facility, with Standard Bank being a key supporter in this process. The availability of funding at competitive terms from the bank market is a clear endorsement of both the company's prospects and those of Sierra Leone," CFO Miguel Perry said.