PERTH (miningweekly.com) – ASX-listed Sino Gas & Energy on Wednesday announced that it had secured a $50-million debt facility from Macquarie Bank to fund its working interest in the Linxing and Sanjiaobei production sharing contracts (PSCs), in China.

“With $57-million in cash at the end of the March quarter and the facility of up to $50-million, Sino Gas is strongly positioned to fund its development shares of the PSCs towards early production and overall development plan submissions, and start the transition to becoming a significant gas producer,” said Sino Gas chairperson Gavin Harper.

He noted that the company had undertaken a strongly contested and rigorous tender process for the debt facility, and had negotiated competitive terms with reasonable interest rates, as well as limited dilution to shareholders.

Under the terms of the debt facility, the first tranche of $10-million would be available for immediate draw-down on the execution of facility documentation and the satisfaction of customary conditions precedent.

The second tranche of $40-million would be subject to the satisfaction of further conditions precedent, including Macquarie obtaining internal credit approvals.

The facility would be secured against Sino Gas’ assets, and the company would issue 30-million four-year options, with an exercise price of 25c each on the execution of the facility documentation. Some 15-million of these options would be issued under no conditions, with the remaining options to be cancelled unless the second tranche conditions precedent were satisfied.

A further 20-million four-year options would be issued at a volume-weighted average price per share, over 30-days prior to the initial draw down of the second tranche funding.

Sino Gas holds a 64.75% interest in the Linxing PSC and 49% in the Sanjiaobei PSC. The company has a 100% working interest during the exploration phase of the PSC, with Sino Gas’ PSC partners being entitled to back-in upon overall development plan approval, by contributing development and operating costs in line with their PSC interest.