PERTH (miningweekly.com) – Junior iron-ore producer NSL Consolidated has secured a $5-million commercial loan from New York investment firm MG Partners to finance the construction of the Phase 2 wet plant, at the Kurnool project, in India.

Under the terms of the agreement, NSL would receive a direct loan of A$600 000 to immediately start Phase 1 dry lump production and to attain domestic sales of up to 10 000 t of lump iron, at an average profit margin of at least 25%.

A further loan of A$1.9-million would be made available once this target had been met and a final A$2.5-million instalment would be paid 120 days thereafter.

The loans would have an 18-month term from the date of each draw-down, were senior secured and bore no yearly interest costs and could be repaid at any time, with a 15% premium.

On receipt of each loan, NSL would pay a 5% fundraising fee through the issue of ordinary shares and would also issue the equivalent of 50% of that loan value in unlisted 3c three-year options.

The loan could be converted into NSL ordinary shares at any time during the term, at a fixed price of 200% of the average volume-weighted average price in the five days prior to the execution date.

Upon the full repayment of the loans, MG Partners would be entitled to receive a 7.5% gross revenue royalty for the life of the Kurnool plant.

NSL MD Cedric Goode said on Thursday that the new loan package ensured the Phase 2 wet beneficiation plant was fully funded and brought confidence to NSL and its shareholders as the company strove towards developing a senior iron-ore mining and processing capability.

The first phase of the Kurnool operation would see NSL transport about 200 000 t of low-grade existing stockpiles at its AP23 tenement to the Kurnool stockyard. The material will be processed through the existing NSL plant, which had been under care and maintenance.

In March, NSL signed an offtake agreement for 200 000 t of existing Phase 1 dry beneficiation plant lump product. This followed a February offtake deal for the first 200 000 t of future Phase 2 wet beneficiation plant fines product.