PERTH (miningweekly.com) – Potash producer Kalium Lakes has announced a A$50-million capital raise to fund the expansion of its Beyondie sulphate of potash (SoP) project, in Western Australia.
The ASX-listed company on Wednesday told shareholders that it would issue some 278-million new shares, at a price of 18c each in two tranches.
The first tranche will consist of some 209.8-million shares, to raise an initial A$37.8-million under the company’s existing share placement capacity. A second tranche of 68-million shares, to raise a further A$12.2-million, will be subject to shareholder approval at the company’s annual general meeting, scheduled for November.
In addition to the capital raise, Kalium Lakes will also conduct a share purchase plan (SPP) to raise up to A$10-million, allowing existing shareholders to subscribe for up to A$30 000 worth of additional shares in the company.
The SPP will open on October 22 and close on November 11.
Kalium Lakes' largest shareholder, Greenstone, which holds some 20.5% of the company’s shares currently, has committed to take up between A$8.8-million and A$11.3-million under the offer to retain a holding of 19.8% post the offer and SPP.
Greenstone will participate across both tranches of the offer and the final quantum of its participation will depend on the take-up under the SPP.
The funds raised would be used on the A$43.5-million expansion of the Beyondie SoP project from its currently 90 000 t/y to 120 000 t/y, which is targeted to be achieved by the fourth quarter of 2022. The expansion followed first SoP production earlier this month.
“Today marks another exciting milestone for the Beyondie SoP project following first production of SoP delivered last week. The expansion further strengthens the company on a number of fronts including the ability to take advantage of economies of scale, provision of working capital facilities, more robust earnings and operating leverage and improves the company’s balance sheet strength,” said Kalium Lakes CEO Rudolph van Niekerk.
“The funding will expand Beyondie from 90 000 t/y to 120 000 t/y which is well timed into a rising SoP price environment and several potential upside opportunities with Covid-19 impacts normalising. With the additional production to 120 000 t/y, Beyondie remains a long-life, low-cost operation with the potential to further expand production.”
Meanwhile, Kalium Lakes on Wednesday also reported the restructure of its existing debt arrangements with its two senior lenders KfW IPEX-Bank and the state of Western Australia, and the provision of an additional liquidity facility of A$20-million.
The key terms of the debt restructure include a deferral of all senior principal repayments for the first two years of production until the end of March 2024 and a two-year extension to the maturity of the senior loans owed by its wholly owned subsidiary, Kalium Lakes Potash until March 2033.
The additional A$20-million liquidity facility provided by the senior lenders is a general purpose facility, which has replaced the A$15-million working capital facility previously provided by Westpac, and will be available for six months, with the potential to extend for another six months at the discretion of the senior lenders.
The liquidity facility will be used for short-term working capital purposes while the company secures additional funding for the capital expenditure to expand production to 120 000 t/y.