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FYI completes DFS and secures A$80m funding

11th March 2020

By: Esmarie Iannucci

Creamer Media Senior Deputy Editor: Australasia

     

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PERTH (miningweekly.com) – ASX-listed FYI Resources has secured an A$80-million project development financing facility for its Cadoux kaolin and Kwinana high purity alumina (HPA) project, in Western Australia, as a definitive feasibility study (DFS) proved the project parameters.

The DFS has confirmed the 2018 prefeasibility study (PFS) results, which found that 8 000 t/y of HPA could be produced from the integrated operation over a mine life of some 25 years.

While the PFS estimated a capital cost of $179-million, the DFS has increased the capital cost to $198-million, with the post-tax net present value estimated at $543-million and the internal rate of return at 46%.

The integrated project is expected to generate annual earnings before interest, taxes, depreciation and amortization of $133-million and cash flows of $88-million.

“We are very pleased with the DFS outcome presented in this report as well as securing significant equity funding. The DFS results represent a persuasive economic case supported by extensive and technically detailed studies. The extent of diligence in this body of work provides us with assurance in our innovative HPA refining process to be able to deliver a high quality, high purity product in a consistent and reliable manner,” said FYI Resources MD Roland Hill.

“The DFS demonstrates that Cadoux has the merit to be developed as one of the sector’s lowest capital and operating cost projects.”

Meanwhile, FYI on Wednesday told shareholders that it had entered into a strategic project development equity financing facility of up to A$80-million with private equity group GEM Global Yield.

The equity commitment is primarily directed towards the capital requirement of the HPA project and will provide up to 30% of the project capital costs, and the funding could potentially represent 100% of the equity component required.

Under the terms of the agreement, FYI could draw down on the facility by giving GEM 15 trading days' notice to subscribe for shares in the company, with the number of shares to be drawn down capped at 1 000% of the average daily number of FYI shares traded on the ASX during the 15 trading days prior to the drawdown notice, and subject to adjustments.

The subscription price of the shares to be issued to GEM will be 90% of either the average closing bid price for FYI shares over the pricing period, or a fixed floor price nominated by FYI in its drawdown notice, whichever is higher.

The share issue to GEM would be subject to the requisite shareholder approval, if there was insufficient capacity under FYI’s placement capacity.

Hill said on Wednesday that the financing package assisted in de-risking the project by providing access to equity funding at a critical development stage.

“Sufficient equity funding is one of the larger challenges for a junior company; we intend to use this funding package to accelerate our development schedule,” he added.

Edited by Creamer Media Reporter

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