3 advanced project developers still raising $$ and locking away crucial off-take deals
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Strandline Resources, Allegiance Coal and Aguia Resources are raising cash and securing product off-take contracts – an extremely tough ask for any project developer in the current subdued environment.
It appears to be ‘business as usual’ for Strandline Resources (ASX:STA), which has inked a $US26m ($43.3m) finance facility to develop the Fungoni mineral sands project in Tanzania.
The facility with Nedbank CIB – “a highly experienced lender to African mining projects” – means Strandline now has a massive chunk of Fungoni’s anticipated $US35m development costs.
This facility remains subject to finalisation of “conditions precedent”, the company says.
This includes finalising additional finance documents with Nedbank, obtaining remaining government related approvals, as well as satisfying the equity shortfall.
As part of this equity raising process, Strandline is in discussions with international finance institutions about “strategic equity investment in Fungoni and/or Strandline”.
Allegiance Coal (ASX:AHQ) has signed an exclusive five year sales and marketing agreement with M Resources Trading for coal produced from the New Elk coking coal development.
In January, the company paid a nominal $1 (plus $C55m in legacy debt) for the shiny, almost production ready New Elk coking coal operation in southeast Colorado, US.
It estimates redevelopment costs of about $US40m for the initial 15 year, 1.4mtpa operation.
A cheap entry into coal production worked well for small cap guys like Stanmore Coal (ASX:SMR) and Terracom (ASX:TER), which each paid a nominal $1 for the mothballed Isaac Plain and Blair Athol mines in 2015 and 2017, respectively.
As part of the deal M Resources will provide up to $US15m of off-take financing, which alleviates overseas customer credit risk and bridges the cashflow gap for Allegiance between coal loaded on a vessel at port and delivered to the customer.
This enables Allegiance to receive funds up to two months in advance of when it would otherwise be paid, the company says.
Late last month the company entered into a terms sheet for a proposed $US25m loan facility with New York based private credit asset manager Nebari Natural Resources Credit Fund to help fund project development.
And the Development Bank of Southern Brazil (BRDE) could fund up to 50 per cent of Aguia Resources’ (ASX:AGR) Três Estradas phosphate project development costs.
The 18-year, Phase 1 mine development will cost about $10.5m to build, the company says.
Aguia is now negotiating the details of the development loan, it says, and will update the market once a final agreement is reached.