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PERTH (miningweekly.com) – ASX-listed Gulf Minerals has secured a $20-million funding facility for a manganese smelter, in Indonesia.
Gulf said on Wednesday it had inked a term sheet with New York-based Sigur Holdings, under which the company would immediately subscribe for A$500 000 Gulf Minerals redeemable convertible notes.
A Sigur Holdings representative would join the board of Gulf Minerals and the Australian company would move to list its subsidiary, which holds the Indonesian manganese smelter project, onto the Nasdaq stock market.
The first $10-million in funding would be secured through a four-year senior credit facility loan, with a yearly interest of 10%, which would be awarded to the listed subsidiary and secured by the project. The funds could be drawn down over 24 months.
The second $10-million funding would be issued through preferred shares in the listed subsidiary, and would be issued at A$2.50 a share, or convertible into strike price equal to 85% of the market price, or redeemed at A$5 a share, after 24 months.
Sigur would have the right of first refusal for any subsequent funding requirement by the listed subsidiary.
Gulf chairperson Graham Anderson described the financing as a watershed moment for the company in its development of the manganese smelter enterprise and said it was the culmination of the past 12 months' focused efforts by directors and senior management.
“We are pleased to be working with Sigur Holdings as they maintain a global presence and long-standing relationship with international resources companies.”
The proposed funding would cover the first stage of the development of the Indonesian smelter enterprise, with the proposed initial public offering covering the balance.
Production from the smelter will be a premium quality 78% ferromanganese alloy, resulting from the unique qualities of the Indonesian ore blended with overseas ores to enhance the iron content to produce an optimum ferromanganese alloy.
Gulf was proposing to build eight furnaces over a four-year period for a total capital cost of $52-million. Each furnace costing $5.6-million has a capacity of 20 000 t/y alloy production.
The first two furnaces would ideally be built during 2015, coming on line in January 2016, with a further two furnaces in each of 2017, 2018 and 2019.