JOHANNESBURG (miningweekly.com) – JSE-listed gold-and-uranium miner Simmer & Jack (Simmers) is to go on a road show to raise R72-million that must be paid to Rand Merchant Bank by July 31 in terms of its recently restructured bridge loan agreement.

Investment bank Absa Capital said in a media release on Thursday that it had raised R128-million for Simmers in a high-yield, unrated bond issuance, the first of its kind to be listed on the Johannesburg Stock Exchange, but that left Simmers R72-million short on its Rand Merchant Bank obligation.

Simmers has furnished R100-million of the R128-million that Absa raised as a bank guarantee to the Department of Mineral Resources (DMR), as part of its transaction to acquire the Tau Lekoa gold mine from AngloGold Ashanti.

The remaining R28-million has been paid over to Rand Merchant Bank, which must receive a total of R100-million by the end of July.

"Effectively, what we need to raise to settle Rand Merchant Bank by the end of July is R72-million. We have already paid over the R28-million that we raised subsequent to the initial R100-million that was used to furnish a bank guarantee to the DMR to close the Tau Lekoa transaction. That physically sits in the bank at R100-million," Simmers CFO Marius Saaiman told Mining Weekly Online on Thursday.

To raise the additional R72-million, Simmers CEO Nico Schoeman and Saaiman are going on a road show towards the middle of next week, to speak to high-yield bond investors who have expressed an interest in taking up the Absa domestic medium term note.

But one of the main determining factors is the closure of the Tau Lekoa deal.

"We have spoken to a number of investors and the trigger in terms of the successful closing of the Absa domestic medium term note programme before July will be the successful closing the Tau Lekoa transaction.

"We have taken very substantial steps to close the Tau Lekoa deal, and we have already made progress. Some of the rights have been registered and two final rights still need to be registered. We expect that to happen within the next day or two," Saaiman said.

Mining Weekly Online understands that Simmers representatives have virtually been camping on the chairs in front of the office of senior DMR official Mike Oberholzer in order to be on hand for any queries relating to the registration of the remaining Tau Lekoa rights.

On further capital raising, Saaiman added to Mining Weekly Online: "We've received indications of interest, which is why we want to go on the road show, but it will almost be unnecessary to go on the road show if we announce the Tau Lekoa closure, because all of those investors have indicated to us that, on announcement of the Tau Lekoa closure, they will take up the remainder of the note.

"I think it is just a question of investors wanting some additional security around the ability of Buffels to service the coupon, which Tau Lekoa does give us," Saaiman said.

Absa's total domestic medium-term loan note facility is for R250-million and Simmers is canvassing shareholders to place the remainder of the facility, and to use all the cash raised under the programme to repay the full R220-million Rand Merchant Bank bridge loan facility.

Absa Capital South African Debt Capital Markets head Prasanna Nana pointed out that South Africa's debt capital market was becoming an increasingly important source of liquidity for a wider range of issuers in the country.

Nana also noted that the Simmers deal was concluded in only four weeks.

"We expect similar types of issuances to come to market as corporates continue to diversify their funding sources away from traditional bank lines and as the high yield market further develops in South Africa," Nana added.

Earlier this month, the Simmers board opted for the Absa note programme rather than going ahead with its onerous R360-million rights offer and complex First Uranium loan note, for which there was too little time.

Simultaneously, the board approved the restructuring of Simmers' R220-million Rand Merchant Bank bridge loan agreement.

The advantage of the Absa note programme is that it can be repaid at any stage from mine cash flows or other cash raising.

Simmers will need to refinance the eventual R250-million Absa note within 12 months of it being issued.

The key terms of the restructured Rand Merchant Bank bridge loan are the repayment of the R100-million by July 31, followed by four equal instalments of R30-million to be paid monthly thereafter from September.

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