TIDMSO4
RNS Number : 5180Z
Salt Lake Potash Limited
24 May 2021
24 May 2021 AIM/ASX Code: SO4
SALT LAKE POTASH LIMITED
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Institutional Placement to enable final debt drawdown
Salt Lake Potash Limited (ASX:SO4) (SO4 or the Company) is
pleased to announce it has received binding commitments for a
successful share placement to institutional shareholders and
investors raising A$28.0 million to enable final debt drawdown and
access to additional funding through a bank guarantee provided by
Sequoia.
Highlights
Equity Placement
The Company has received binding commitments from institutional
shareholders, sophisticated investors and directors to subscribe
for up to 80 million new ordinary shares of no par value (Ordinary
Shares) at A$0.35 each to raise A$28.0m (before costs)
(Placement).
Final debt drawdown and equity release
As announced on 4 March 2021, the Company completed a successful
syndication of its US$138 million Syndicated Facility Agreement
(SFA) with Taurus Mining Finance Fund No.2 L.P. (Taurus) and the
Clean Energy Finance Corporation (CEFC) with Sequoia Economic
Infrastructure Income Fund (SEQI) and Commonwealth Bank of
Australia (CBA).
Use of proceeds
The proceeds from the Placement will be used for general
operating expenses during the ramp up of the Lake Way Project. The
Placement is a key condition to enable the Company to undertake the
final US$33 million drawdown under the SFA, as well as providing
for the implementation of an A$18 million guarantee facility to be
provided by SEQI in support of the gas pipeline constructed by APA
Operations Pty Ltd (APA). The guarantee facility provided by SEQI
will release A$18m in equity that will be used for general
operating expenses during the ramp up of the project.
Lake Way significantly de-risked
Following the Placement and final debt drawdown the Lake Way
Project is significantly de-risked with Part IV EPA approvals now
received and first SOP production expected in the coming weeks.
Equity Raise Presentation
A copy of an Equity Raise Presentation is available on the
company's website at
http://www.saltlakepotash.com.au/corporate_presentations.php .
CEO Statement
"SO4 is pleased to have completed this placement of A$28 million
to enable final drawdown under the SFA. The Company can now focus
on ramping up production as we move to first revenues from the Lake
Way Project in the very near-term. I would like to extend my
sincere thanks to our shareholders for their continued support of
the project, our Company and the development of a new long-term
export industry for Australia."
Tony Swiericzuk Chief Executive Officer
Debt financing
As announced on 5 August 2020, SO4 executed the US$138 million
SFA with Taurus and CEFC, with the initial US$105 million drawdown
undertaken in December 2020 and the subsequent syndication to SEQI
and CBA occurring in early March 2021.
The material terms of the SFA remain unchanged (other than for
the early repayment of US$11 million in June 2022 described below)
and are summarised in Table 1 below.
Table 1: Syndicated facility agreement key terms
Facility Amount US$138 million (SEQI US$39 million,
CEFC US$39 million, Taurus US$35 million,
CBA US$25 million)
Tenor 4 Years (30 September 2024)
Availability Period Financial close until 30 June 2021
Interest rate 9.0% per annum payable quarterly on
drawn funds
Upfront Fee 2.75% (paid)
Undrawn Commitment 2.5% per annum
fee
Tranches Final US$33 million tranche drawn on
completion of Tranche 1 of the Placement
as described below
Amortisation/Repayment No scheduled repayments or debt amortisation
until 31 March 2022 (approximately
10 months after first production).
Quarterly repayments thereafter.
Prepayment of US$11 million due in
June 2022 (with this amount to be set
aside in a blocked account until the
prepayment is made)
Additional cash sweep of 70% of surplus
cash available for debt service
Debt Service Reserve US$8 million until June 2022, thereafter
Account greater of US$8m and principal and
interest payable in next 6 months
Bullet US$92 million (67%) at 30 September
2024 (less cash sweep payments)
Refinancing Restrictions Nil 18 months after signing
Key covenants LLCR 1.5x and DSCR 1.3x
------------------------- ---------------------------------------------
Table 2: SEQI gaurantee facility key terms
Facility Amount A$18 million
Tenor Same as the SFA (30 September 2024)
Availability Period Drawn in full on satisfaction of conditions
precedent
Interest rate 12% per annum payable quarterly on
drawn funds
Upfront Fee 1%
Amortisation/Repayment As the face value of the bank guarantee
steps down over time, the cash backing
released is to be repaid to SEQI. The
balance is to be repaid on 30 September
2024.
Refinancing Restrictions Same as SFA (restrictions cease on
4 February 2022)
-------------------------- --------------------------------------------
Equity financing
In order to achieve final drawdown on the SFA, SO4 is raising
A$28 million in equity financing by way of a placement of
79,947,858 Ordinary Shares at A$0.35 per new share. The funds will
be used for general operating expenses at the Lake Way project as
it ramps up to full production.
Placement details
The Company has received firm commitments to raise gross
proceeds of A$27 million via a private placement to sophisticated,
professional and institutional investors. The private placement
will comprise the issue of 77.1 million new fully paid ordinary
shares (Placement Shares) at an issue price of A$0.35 per share
(Placement).
SO4 Directors intend to subscribe for 2.8 million Placement
Shares, including 2.5 million shares by Chairman Ian Middlemas and
250,000 by Managing Director and CEO Tony Swiericzuk, subject to
shareholder approval. If approved by shareholders, this would raise
an additional A$0.98 million.
The Placement is comprised of two tranches:
-- Tranche 1, comprising the issue of 77,142,858 Placement
Shares under ASX Listing Rule 7.1. The Tranche 1 Placement Shares
are expected to be issued on or around 1 June 2021
-- Tranche 2, comprising the issue of 2,805,000 Placement Shares
to Directors, subject to the receipt of prior approval of the
Company's shareholders. A general meeting to seek the requisite
approval will be convened shortly, with the meeting expected to be
held in July 2021.
The issue price of A$0.35 per share represented a 12.5% discount
to the last traded share price on ASX of A$0.40 and 14% to the
5-day volume weighted average share price on ASX prior to the
Company entering into the Trading Halt on 21 May 2021.
Capital raising timetable
Euroz Hartleys Securities Limited and Canaccord Genuity Group
Inc. were acted as Joint Lead Managers and Bookrunners to the
Placement. Cenkos Securities Plc acted as Co-Manager.
Table 3: Indicative timetable
Facility Amount A$18 million
Announcement of Placement Monday, 24 May 2021
Settlement of Tranche 1 Placement Monday, 31 May 2021
Shares
Allotment, quotation and trading Tuesday, 1 June 2021
of Tranche 1 Placement Shares
General Meeting to approve July 2021
the issue of the Tranche 2
Placement Shares
Allotment, quotation and trading Following the General Meeting
of Tranche 2 Placement Shares
---------------------------------- ------------------------------
Note: The above dates are indicative only and are subject to
change, subject to compliance with the ASX Listing Rules and
Corporations Act.
Related Party transactions
The proposed participation in the Placement by Mr Ian Middlemas
(2.5m shares), Mr Tony Swiericzuk (250,000 shares) and Mr Peter
Thomas (55,000 shares), constitute related party transactions under
Rule 13 of the AIM Rules for Companies. The independent directors,
having consulted with the Company's nominated adviser, Grant
Thornton UK LLP, consider that the terms of the transactions are
fair and reasonable insofar as the Company's shareholders are
concerned.
Settlement and dealings
Application has been made to the AIM Market of the London Stock
Exchange ("AIM") for the 77,142,858 new Placement Shares, which
rank pari passu with the Company's existing issued Ordinary Shares,
to be admitted to trading. Dealings on AIM are expected to commence
at 8:00am on Tuesday, 1 June 2021 ("Admission").
Total Voting Rights
For the purposes of the Financial Conduct Authority's Disclosure
Guidance and Transparency Rules ("DTRs"), following Admission, SO4
will have 813,670,721 Ordinary Shares in issue with voting rights
attached. SO4 holds no shares in treasury. This figure of
813,670,721 may be used by shareholders in the Company as the
denominator for the calculations by which they will determine if
they are required to notify their interest in, or a change to their
interest in the Company, under the ASX Listing Rules or the
DTRs.
Lake Way project update
The Lake Way Project is on schedule for first SOP production in
June 2021 and first SOP sales very shortly thereafter.
Commissioning is substantially progressed with 26 of the 34 Plant
Process Units now commenced and 17 of those Process Units now
finalised to Practical Completion. Overall plant commissioning is
more than 50% complete. The target for full scale production of
245ktpa remains the June quarter of 2022.
Revenue expectation in 2021 has been reduced, driven by expected
slower harvest salt ramp up due to a delay in receipt of EPA Part
IV until late April following the recent state election, a lower
evaporation rate incorporated into new dynamic pond model and a
larger than expected impact from harvest salt production cells
being taken offline during peak salt formation from December to
February to prove harvesting methodology. Train 3 pond cells have
been repurposed to reflect revised pond design. The reduced revenue
expectation for 2021 was a key consideration in determining the
additional funding required.
In addition, the project capital budget for the initial scope of
works has increased by A$5m to at A$269m as a result of advancing
sustaining capital work involving the construction of 271Ha of
pre-concentration ponds (A$2.5m) and associated trench and bore
capacity (A$2.5m) to feed the additional pond acreage. The
additional pre-concentration ponds will help to de-risk salt
production, with the lending syndicate's Independent Technical
Review Report noting "It is clear [that] together with conservative
process design criteria, the revised pond system on average will be
able to produce in excess of nameplate production, with worst case
conditions meeting nameplate".
As part of the project final cost to complete review operating
cost assumptions have also been updated, with steady state costs
increasing from A$337/t (adj. for higher AUD FX and shipping from
Fremantle) to A$390/t. The primary drivers for the increases in
expected operating costs are higher onsite logistics (+A$30/t),
laboratory (+A$8/t) and increased diesel and labour costs
(+A$14/t).
Trading Halt on ASX
The Trading Halt on ASX, announced 21 May 2021, was lifted prior
to the opening of trade on 24 May 2021, following an announcement
to the ASX market regarding the above.
Additional disclosures
Key risks
Refer to pages 30 to 35 (inclusive) of the Presentation released
to ASX on 24May 2021
Selling restrictions
Refer to pages 36 to 38 (inclusive) of the Presentation released
to ASX on 24 May 2021.
Forward looking statements
This announcement includes forward-looking statements. These
forward-looking statements are based on the Company's expectations
and beliefs concerning future events. Forward-looking statements
are necessarily subject to risks, uncertainties and other factors,
many of which are outside the control of the Company, which could
cause actual results to differ materially from such statements.
Although the Company believes that its forward-looking statements
have reasonable grounds, can give no assurance that they will be
achieved. They may be affected by a variety of variables and
changes in underlying assumptions that are subject to risk factors
associated with the nature of the Company's business (including
those described in pages 30 to 35 (inclusive) of the Presentation
released to ASX on 24 May 2021), which cause actual results to
differ materially from those expressed herein. The Company makes no
undertaking to subsequently update or revise the forward-looking
statements made in this announcement, save where required by law or
regulation, to reflect the circumstances or events after the date
of this announcement.
Not an offer in the United States
This announcement has been prepared for publication in Australia
and may not be released to US wire services or distributed in the
United States. This announcement does not constitute an offer to
sell, or a solicitation of an offer to buy, securities in the
United States or any other jurisdiction. Any securities described
in this announcement have not been, and will not be, registered
under the US Securities Act of 1933 and may not be offered or sold
in the United States except in transactions exempt from, or not
subject to, the registration requirements of the US Securities Act
and applicable US state securities laws.
Tony Swiericzuk / Richard Knights Salt Lake Potash Limited Tel: +61 8 6559 5800
Colin Aaronson / Lukas Girzadas Grant Thornton UK LLP (Nominated Adviser) Tel: +44 (0) 20 7383 5100
Derrick Lee / Peter Lynch Cenkos Securities plc (Joint Broker) Tel: +44 (0) 131 220 6939
Rupert Fane / Ernest Bell Hannam & Partners (Joint Broker) Tel: +44 (0) 20 7907 8500
This announcement has been authorised for release by the Board
of Directors.
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END
MSCAJMJTMTATTIB
(END) Dow Jones Newswires
May 24, 2021 02:00 ET (06:00 GMT)
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