Photo by: Duane Daws
JOHANNESBURG (miningweekly.com) – Tanzania-focused mineral exploration and development company Kibo Mining has entered into a binding term sheet with UK-based private equity provider Sanderson Capital Partners for a new $2.9-million forward payment facility.
The facility provides for Kibo to be advanced part of the $3.6-million development cost recovery, which is payable to the company by Chinese contractor Sepco III on achieving financial close of the Mbeya coal-to-power project (MCPP), in Tanzania. The facility has the effect of forward selling the MCPP at a 20% discount.
The cash payment will be paid in five tranches, with the last one scheduled to be transferred in June 2017.
The company will issue new ordinary shares to Sanderson to the value of $732 036 – which is the difference between the amount of the MCPP and the funds to be provided under the facility – at the volume weighted average price (VWAP) for Kibo shares over the 30 days prior to the date of signing of the term sheet, which was signed on Tuesday.
Kibo is under no obligation to draw the full amount available under the facility, but will forfeit any payments not drawn against on the due date of the relevant tranche and it will repay to Sanderson the amounts drawn down on the facility on receipt of the the MCPP payment from SEPCO III.
Sanderson has the right to convert up to £1.5-million of the amount drawn down on the facility into Kibo shares at the 30-day VWAP prior to the repayment date of the total facility amount.
In addition, Kibo will also pay a £71 442 corporate advisory fee to the company's broker Beaufort Securities. This advisory fee is payable on signing of the term sheet in Kibo shares at 6.97p for a total of about one-million shares.
Kibo CEO Louis Coetzee said the company was pleased with the facility, as it enabled Kibo to create short- to medium-term funding certainty in a market that remained challenging for capital raising.
He commented that it had also provided Kibo with a “creative way” of leveraging the deferred Sepco III payment and provided a funding solution with minimal dilution to shareholders.
“The funds which have been made available will satisfy our cash requirements for a significant time, allowing management to focus all their time and energy on bringing the MCPP to a successful financial close as early as possible in 2017. We also aim to conclude the Opera transaction and complete the planned feasibility work on the Imweru gold project as scheduled,” Coetzee added.