BCI poised to begin Mardie construction in 2022 after finalising $360 million equity funding package
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BCI Minerals is fully funded to begin construction in early 2022 on its Mardie Salt Project in the Pilbara after locking up a $360 million capital raising cornerstoned by Australia’s largest super fund.
The $1.2 billion project 100% owned by BCI Minerals (ASX:BCI) has been billed as the first major salt development in WA in more than 20 years and one of the largest in the world, producing 5.35Mtpa of sodium chloride and 140,000tpa of sulphate of potash over a life of 60 years.
AustralianSuper will come on board by purchasing $75 million worth of shares in a deal that will also see BCI pick up AustralianSuper’s stakes in fellow SOP hopefuls Agrimin and Highfield Resources.
The super giant will be able to up its stake even further through $100 million of convertible notes that may be issued to AustralianSuper by BCI during 2022 with an exercise price of 62.35c a share, a 45% premium to the 43c a share placement offer.
Wroxby, the private investment vehicle of WA media and mining mogul Kerry Stokes’ family, and BCI’s major shareholder, has made commitments to take up $110m of the $240 million placement.
Other existing shareholders Ryder Capital and Sandon Capital will take up placements of $28.5m and $3.5m, respectively.
A further $20 million will be raised in a share purchase plan, sub-underwritten by AustralianSuper, with the capacity to accept oversubscriptions, while Canaccord Genuity will underwrite it and the balance of the $240m placement.
Other sources of equity funding for the transformational Mardie project, the first salt development in WA in 20 years, will include BCI’s $106 million cash reserves and royalties from the Iron Valley iron ore mine.
BCI also has potential royalties or payments from ‘Koodaideri-South’, Bungaroo South and Kumina as well as the shares it is acquiring from AustralianSuper which could supplement cash.
On top of that, BCI is planning to line up a $40 million corporate debt facility with a Tier-1 international bank and has including $490 million through the Commonwealth’s Northern Australia Infrastructure Facility, and $110 million through the Australian Government’s Export Finance Australia.
Investors are certainly on board with the BCI story, with Ryan Stokes, the CEO of Wroxby’s parent company Australian Private Equity, saying Mardie is a world-class project.
“The ACE Group is pleased to make a substantial commitment of approximately $100M for new shares, to support the Mardie Project,” he said.
“We are excited to see the project reach this important milestone and recognise the work of the BCI team and board.
“We believe that Mardie is a world-class salt project which will create substantial value for BCI shareholders, the local community, and the State of Western Australia over many decades.
“We are attracted by the sustainable, renewable nature of solar salt, the project’s long life, and its scale – Mardie will be one of the largest solar salt projects in the world.”
Ryder Capital executive director Peter Constable said: “The Mardie Project is a significant development offering BCI shareholders ownership in a unique, sustainable and attractive long duration asset.
“We are pleased to continue to support the project and the BCI board and management team by way of our commitment to invest a further approximately $28.5M.”
BCI chairman Brian O’Donnell said the funding package, which sews up BCI’s $460 million equity funding requirements for the project, was a major milestone.
“The strong support from existing shareholders and new investors underscores the merits of the Mardie Salt and Potash Project as a long term, sustainable and integrated opportunity,” he said.
Managing director Alwyn Vorster paid tribute to both existing and new cornerstone shareholders for supporting the project’s construction.
“Mardie will turn an inexhaustible seawater resource into high quality salt and potash needed to produce thousands of products sustaining everyday life.”
Mardie is expected to deliver $8bn in corporate taxes, $800m in state royalties, $200m of native title payments, multi-user export infrastructure, local jobs and contracts and indigenous engagement over its more than 60-year life.
The multi-generational project could generate annual earnings before interest, taxes, depreciation, and amortisation (EBITDA) of approximately A$250m over an initial 60-year mine life from the production of salt and potash.
Operating costs are estimated to be about A$21.50/t of salt and A$337/t of potash versus a 60-year average price of US$40/t (A$55/t) for salt and US$578/t (A$819/t) for potash.
The project location is considered to be ideal for establishing a large-scale solar evaporation operation with optimum climate conditions, large expanses of impermeable mudflats suitable for evaporation ponds, minimal environmental and heritage sensitivities, and a coastal location for low-cost shipping to Asian markets.
Highlighting this is the presence of five existing solar evaporation salt projects that have been operating in the region for up to 50 years, though Mardie’s differentiating factor is its production of SOP as a by-product.
This article was developed in collaboration with BCI Minerals, a Stockhead advertiser at the time of publishing.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.