Aim-listed emerging African phosphate producer and developer Kropz has entered into a new conditional convertible equity facility of up to R550-million – about $31.6-million – with major shareholder African Rainbow Capital (ARC) Fund to progress the ramp-up of operations at the Elandsfontein phosphate project in Gauteng, South Africa.

In addition, the funding will also provide working capital to the company for general corporate purposes and further funding of about $1-million for working capital and early site works at the Hinda project, in Congo-Brazzaville. 

The Elandsfontein project requires additional working capital owing to delays in the ramp-up of operations and subsequent delays in first revenues, the company says. 

The new R550-million equity facility is in addition to the R200-million conditional equity facility, which ARC and Kropz announced in September last year. This facility is fully drawn and has not been converted to new ordinary shares. 

Moreover, the new facility is also added to the R177-million conditional equity facility which ARC and the company announced in May. This facility is also fully drawn and has not been converted to new ordinary shares either. 

On August 9, Kropz and ARC agreed to a R121.5-million – or $7.3-million – bridge loan facility to meet immediate cash requirements at Elandsfontein. A R60-million drawdown of this loan was made on August 9; R47-million on September 1; and a third and final drawdown of R14.5-million made on September 29.

On September 30, the parties agreed to a further R126-million bridge loan facility to meet further funding requirements at Elandsfontein owing to further delays in the ramp-up of operations at Elandsfontein.  

A drawdown of R60.5-million was made on this second loan on October 6. The second and final drawdown of R65.5-million was made on October 28.  

The new R550-million equity facility comprises a total commitment of up to R550-million provided by ARC, which can be drawn down at the discretion of Kropz. 

The original two loans will be settled by way of a first advance under the new R550-million equity facility, once approved and unconditional, leaving R302.5-million available for drawdown over the term. 

Repayment of the new R550-million equity facility capital amount will, at the election of ARC, either be in the form of the conversion into ordinary shares or payable in cash. 

The first drawdown is expected on December 1. 

The new R550-million equity facility will be secured by the shares which Kropz holds in phosphate mining concern Cominco Resources.