Walkabout Resources Ltd (ASX:WKT) has signed a term sheet with Gemcorp for up to US$25 million to complete construction of the Lindi Jumbo Graphite Mine in Tanzania.
Construction of the project is well advanced and scheduled for completion before the end of 2023.
Highlights
o Term sheet signed for up to a US$25 million senior debt facility comprising a tranche A US$20 million senior secured debt facility and a tranche B US$5 million unsecured standby facility,
o Loan Facility provides the funds to complete the build and commissioning of the Lindi Jumbo mine and the necessary working capital required through to production.
o Drawdown can occur for approved expenditure and repayment of interim funding as soon as formal documentation is complete which is expected to be early May 2023.
o Total development costs since 2021 will be approximately 50% debt funded.
“It is pleasing to know that the Lindi Jumbo Project will be funded through to production. Having Lindi Jumbo more than 85% complete to cost prior to the first drawdown, provides a significantly different base for project debt than any of the prior arrangements,” CEO, Andrew Cunningham, said.
“Debt will fund just under half of the total development cost including working capital since 2021. This prudent leverage will increase the future earnings per share for shareholder relative to Lindi Jumbo being fully equity funded.”
The Loan Facility will ensure that the Lindi Jumbo Graphite Project is funded into production. The loan will be a high yield senior debt facility with non-dilutive free cash flow participation over the term of the loan. The term of the loan is for three years with interest to be set at secured overnight financing rates (SOFR), currently 4.5% plus a high yield margin to be settled at the end of the due diligence.
The Lender will also be entitled to a proportion of free cash flow after tax and debt servicing, with the proportion to be confirmed through the final due diligence. This entitlement is to commence no earlier than 12 months from drawdown and no later than 30 June 2026. First drawdown is expected in early May 2023 after completion of final due diligence and formal documentation.
The Loan Facility is primarily associated with Project construction and capex, commissioning and working capital as well as financing costs and Corporate G&A costs.
For further information please visit: https://wkt.com.au/
