Calidus secures £60.9m debt financing for Warrawoona project
Calidus Resources (Calidus) has executed a committed credit approved letter of offer from Macquarie Bank for project loan facilities totalling £60.9 million, along with an associated gold hedging facility (debt financing) to fund the development of its 100 percent owned Warrawoona Gold Project in Western Australia.
The selection of Macquarie Bank as preferred debt provider delivers a debt financing package with low overall cost, reasonable covenants, ability to distribute and use free cash, low shareholder dilution and flexibility in relation to early repayment, according to a Calidus statement.
The debt financing package follows an extensive global tender and due diligence process on Calidus and the Warrawoona Project. The company adds that it is on track for the commencement of plant construction in Q1 2021.
“Binding terms for the debt financing were agreed following a strongly contested and rigorous global tender process culminating in final discussions with shortlisted potential financiers who presented very competitive terms. These parties undertook an extensive technical due diligence process which provides strong validation of the technical aspects of the Warrawoona Project,” the statement says.
“This is a significant milestone for the project and the Company and allows the Company to commit to full development in the coming quarter. Macquarie have conducted extensive due diligence on Warrawoona and their agreement to provide the facility is a strong vote of confidence in the Project and Calidus, and we look forward to working with the team at Macquarie on completing all documentation and conditions precedent to drawdown.
“With the access road, water bores and telecommunications now complete and the village install progressing on time and budget, we will now conclude all major contracts and final operating permits to allow for main project construction in the coming quarter,” says Dave Reeves, managing director at Calidus.
Although the full terms of the facilities are confidential, the key points are:
- Project loan facilities (“Facility”) of £60.9 million and competitive margin above BBSY (pre-completion and post-completion)
- Loan covenants customary for a facility of this type and reflect the competitive nature of the current bank market and 3.25-year tenor from commencement of repayments in June 2022
- The Facility can be repaid early at any time without restriction or financial penalty and ability to distribute surplus operating cashflows (after debt service) from the project subject to certain conditions - providing ongoing funding which can be used at Calidus’ discretion
- Mandatory hedging of approximately 105,000oz with deliveries spread over the tenor of the facility – this hedging quantum is approx. 25% of forecast production over this period
- Security is provided via a fixed and floating charge over the assets of Keras (Pilbara) Gold Pty Ltd (a wholly owned subsidiary) and corporate guarantee provided by Calidus until the achievement of Project Completion secured by the shares held in Keras (Pilbara) Gold Pty Ltd
- The Facility is drawn down in stages with interest payable on the amounts drawn and a competitive undrawn line fee payable on undrawn funds in the availability period
Completion of final Debt Financing agreements remains conditional upon documentation and other conditions precedent usual for financings of this nature. Subject to satisfaction of these remaining conditions, Calidus expects final agreements to be concluded early 2021, the statement adds.
Argonaut is Calidus’ financial advisor in relation to the debt financing.
Lynas revenue jumps 21% as rare earth prices jump
Australian miner Lynas Rare Earths posted a 20.6% rise in revenue in the March quarter as selling prices for the key metals it mines hit record highs amid strong demand, particularly for neodymium and praseodymium (NdPr).
NdPr is used in magnets for electric vehicles and windfarms, in consumer goods like smartphones, and in military equipment such as jet engines and missile guidance systems.
The company said it plans to maintain production at 75% however, as it seeks to continue to meet covid-19 safety protocols and grapples with shipping difficulties. Shares in Lynas fell 6.1% after the results.
“They have faced a few logistics issues, and it would be good to know when they are going to start lifting their utilisation rates a bit,” said portfolio manager Andy Forster of Argo Investments in Sydney.
“Pricing has been pretty strong although it may have peeled back a bit recently. I still think the medium, long-term outlook is pretty good for their suite of products.”
Lynas post ed revenue of A$110mn ($85.37mn) for the three months to the end of March, up from A$91.2mn a year earlier as prices soared.
It said its full product range garnered average selling prices of A$35.5/kg during the March quarter, up from $23.7 in the first half of the financial year. “While the persistence of the covid crisis, especially in Europe, calls for careful forecasts for our business ahead, we see the rare earth market recovering very quickly,” said Lynas, the world’s largest rare earths producer outside China.
Freight demand has spiked during the pandemic, while the blockage of the Suez Canal in March delayed a shipment to April.
Lynas’ output of 4,463 tonnes of rare earth oxide (REO) during the quarter was marginally lower than 4,465 tonnes from a year earlier.