JOHANNESBURG (miningweekly.com) – The stake of natural resource development company Red Rock Resources in strategic alloy producer Steelmin has increased to 17%, after being issued an additional 1% share capital as part of a €3.87-million secured loan agreement.
The eight-month secured loan note, agreed in June, saw Aim-listed Red Rock receive 16% of the fully diluted equity of Bosnia-based Steelmin as partial consideration.
The agreement outlined that Red Rock’s share would increase 1% should the loan not be fully repaid by September 1, and a further 1% each month until April 2018, 0.9% in May 2018 and 1.1% in June 2018.
Thereafter, the increases will settle at 1% a month up to a maximum holding of 30%.
The loan enables Steelmin to progress the refurbishment of its ferrosilicon smelter complex in Jajce, Bosnia, with production expected to start in the first quarter of next year.
"A great deal of progress has occurred since we invested just over two months ago, and the project appears to be on track and under budget,” said Red Rock chairperson Andrew Bell in an update to shareholders on Friday.
He said that the major components had been ordered, with the delivery and installation scheduled for between October and early to mid-December.
The on-site team has also expanded from 45 to 70, with an eventual planned workforce of 150.
Steelmin currently projects operating revenues of €35-million in its first full year of operations, with gross margins expected to come in at about 33%, assuming production of 85 t/d over 339 days a year and a ferrosilicon selling price of €1 200/t.