PERTH (miningweekly.com) – ASX-listed Australian Bauxite has secured up to A$8-million in financing for the development of its Tasmanian project, from commodities group Noble Resources.
Under the terms of the agreement, Noble would provide Australian Bauxite with A$6-million in project finance, as well as a A$2-million stand-by facility in the event that operations are expanded, in return for the exclusive global marketing rights over the Bald Hill project.
The loan facilities would be repaid within two years from first drawdown, and it was anticipated that about A$1-million would be required by December this year, when project construction was set to start.
Interest would accrue at a rate of 8.75% a year on the outstanding balance, and Australian Bauxite would provide a guarantee over the Tasmanian assets as security.
Meanwhile, Noble has agreed to act as the marketing agent for all the product produced from the Bald Hill project, while also agreeing to purchase 50% of the product produced over the first four years of operation, at an agreed fixed price.
Last month, Australian Bauxite was awarded its first mining lease for the Bald Hill project, with the development proposal and environmental management plan lodged with the Environmental Protection Agency.
Initial production at Bald Hill was planned to be around 500 000 t/y of direct-shipping-ore quality bauxite. Production would be scaled up over the next two years to about two-million tonnes a year.
The project was expected to require a capital investment of around A$4.5-million.
Australian Bauxite CEO Ian Levy told shareholders on Monday that the agreement with Noble was an ideal outcome for shareholders.
“Noble has a proven track record in helping independent miners in Australia. Noble provides the funding, supportive offtake and marketing alliance that we wanted to rapidly enter the bauxite market.”
Furthermore, he noted that Australian Bauxite had a similar market outlook to Noble and had the flexibility to exploit market niches and grow stronger.