Aim-listed Kropz has entered into a convertible equity facility of up to R200-million with African Rainbow Capital (ARC) Fund to get the Elandsfontein phosphate project commissioned.
The new equity facility is in addition to a $5-million facility which ARC, the company’s 82.7% shareholder, and Kropz entered into in February, of which $600 000 remains undrawn.
The emerging phosphate producer announced earlier in the year that it would have a funding shortfall of about $8.5-million, or R127-million, for commissioning and ramping up the project by the first quarter of next year.
The development of the project was also funded by ARC, with a loan facility of up to $40-million, or R680-million, having been signed by the companies in June last year.
Kropz explains that a fluctuating rand:dollar exchange rate over the last year resulted in the funding shortfall.
The company expects to draw down from the latest facility toward the end of October. The new equity facility is being secured by shares that Kropz holds in Cominco Resources.
The Elandsfontein project has been experiencing a myriad of challenges before getting to production, including appeals of its water-use licence, steel and industrial oxygen shortages, adverse weather conditions and a need to revisit its processing design.
The Water Tribunal has since dismissed an appeal against the granting of an integrated water use licence for the project, marking the end of a five-year legal battle with West Coast Environmental Protection.