All subscribers to the convertible loan notes issued on September 27 by Tanzania-focused mineral exploration and development company Kibo Mining have elected to convert the notes to Kibo shares.

The notes were converted at a Kibo share price of £0.05, which was calculated in accordance with the note term sheet, the company said in a September statement.

Kibo CEO Louis Coetzee says the company is “delighted that all subscribers exercised their right to convert the notes to ordinary shares in Kibo”.

He notes that this decision is a clear display of reiterated support towards the company and the direction it is heading. “I believe that the parties involved see Kibo as a long-term investment that will add value, not only to their own investment portfolios but also to all the shareholders.”

When Kibo announced that it had issued convertible loan notes, it welcomed the support of all parties in the development of Kibo and the advancement of its flagship Mbeya coal-to-power project (MCPP), in the Songwe region, in south-western Tanzania.

Kibo issued 1.55-million in convertible loan notes in the company to a new high-net-worth investor, directors and management of the company, and funding provider Sanderson Capital Partners.

“All parties involved in the uptake of the convertible loan notes understand the potential of the company and have agreed to subscribe, importantly, at a price not less than £0.05 a share,” says Coetzee.

The subscription raises £500 000 new capital, satisfies £260 000 of awards instead of Kibo Mining’s management incentive scheme and is in settlement of the new terms agreed covering £790 000 of the discounted debt sale facility currently in place between Sanderson Capital Partners and Kibo. The note issued to Sanderson is not in respect of new capital raised, it is to accommodate a mutually agreed change to the terms and conditions of the facility currently in place between Sanderson and Kibo.

“We are delighted to welcome a new highly supportive investor and also agree terms with Sanderson, which has been extremely supportive since we arranged the facility in December last year,” Coetzee states.

Kibo Mining granted Sanderson the opportunity to convert some of the outstanding funds drawn down by the company under the facility to Kibo shares earlier and at a different volume-weighted average price than is stipulated under the current loan arrangements.

Coetzee explains that the facility granted to Kibo provided for it to draw down $3.68-million under the terms of the facility. Repayment of funds drawn down are repayable to Sanderson on receipt by Kibo of the payable amount to it by engineering company Shandong Electric Power Construction Corporation when financial close has been reached on the MCPP.

“As financial close has not yet been reached on the MCPP, Kibo is granting Sanderson an opportunity to undertake an early conversion of part of the outstanding draw down amount, by subscribing for a convertible loan note under this note issue,” Coetzee explains.

“With a strong balance sheet and limited field activity, we currently have a relatively low cash burn. Finally, we believe the decision of the directors and management team to accept the notes in lieu of bonus shares provides a good signal to the market that we believe there is significant value to be added going forward,” Coetzee adds.