Aim-listed Kropz has entered into a new conditional convertible equity facility of up to R177-million, or $11-million, with its major shareholder African Rainbow Capital (ARC) Fund, pending shareholder approval at a general meeting on May 30.
The funds will be used to progress the Elandsfontein phosphate project, in South Africa’s Western Cape province, to first revenues from bulk concentrate sales, which is anticipated late in the second quarter of the year.
The new loan will be off-set against a prior R25-million, or $1.6-million, bridge loan facility entered into between the companies in April to meet cash requirements.
This leaves R152-million for drawdown over the term.
Kropz also has a R200-million facility with ARC Fund, from February 2021, which was fully drawn down as of April last year.
The new loan will be payable in cash or in the form of conversion into ordinary shares over the next five years.
Kropz has been experiencing cash shortfalls owing to slower-than-expected progress in the ramp-up of operations at Elandsfontein, resulting in delays in the production of sufficient phosphate rock concentrate required for the first bulk sales.
In turn, a delay in commissioning the project was largely owing to the need to re-engineer parts of the fine flotation circuit proposed by the vendor, and was further exacerbated by unpredicted ore variability and a lack of operator experience.
ARC Fund currently owns 83.2% of Kropz’s ordinary share capital. In turn, Kropz owns 70% of the Elandsfontein project, while ARC Fund holds 25%.
The project is expected to deliver one-million tonnes a year of phosphate rock concentrate at steady state.