PERTH (miningwekly.com) – Graphite miner Valence Industries' share price surged on Monday as the company announced a reduction in its overall debt facilities from the initially planned $75-million to $40-million.

The decision came after the company in September announced a revision to the planned expansion programme at its Uley facilities, in South Australia, to improve the existing processing plant with the addition of grinding and screening capacity.

These enhancements were expected to generate more higher-grade product at a lower processing cost, while accelerating the increase in overall capacity from 14 000 t/y to a target of more than 21 000 t/y.

The required capital expenditure for this 50% increase in output capacity has been estimated at only A$7-million.

The Uley operation delivered its first graphite in June.

Valence said on Monday that the drawdown under an initial finance facility would amount to $20-million. The syndicated finance members have already completed the key technical due diligence for this facility and have undertaken a review of the nature and scope of Valence’s engagement with customers.

Completion of the due diligence and closure of the initial funding facility is expected shortly.

Valence also has a A$5-million bridging facility in place, of which A$4.5-million has already been drawn down to fund the company’s short-term financing requirements.

The graphite miner said it was committed to funding the expansion programme through the syndicated finance facilities. It added that completing the financing through a staged approach would ensure that Valence’s capital requirements were properly met and structured within the company’s expected production profile and repayment capability.

Valence's shares were trading at a high of 16c each on Monday, up from an opening price of 14c each.