Globe Metals & Mining Ltd (ASX:GBE) is a step closer to securing the funding required for Phase 1 production at the Kanyika Niobium Project in Malawi, after obtaining a letter of intent (LOI) from Ecobank Malawi Ltd for a US$15 million loan facility.
The LOI marks an important milestone to fully funding the project’s first phase of production, which is expected to require US$46 million in costs.
De-risking project for further funding
“The signing of the Ecobank Malawi Limited LOI for the US$15 million facility marks a transformative moment for Globe, paving the way for the development of the Kanyika Project in Malawi," Globe’s CEO Paul Smith said.
“The funding will support key aspects of the capital development of the project. This funding, together with our advanced discussions on equity funding and pre-shipment funding is now crystalizing the funding package for the Phase 1 development as previously announced.
“The facility constitutes 33% of the total Phase 1 capital requirement, inclusive of indirect capital cost.
“We look forward to working with Ecobank Malawi Limited and its strategic partners on this exciting project, and the associated de-risking of the project for other partner funders.”
The details of the LOI include a 5-year loan term including a 24-month moratorium, with repayments to be made in equal monthly instalments including both principal and interest.
It remains subject to due diligence, the negotiation of a definitive loan agreement, approval by authorities and the receipt of regulatory approvals.
The LOI will remain valid until October 31, 2024, and is non-binding.
Advancing government strategy
“We are excited to take the first steps forward with this Letter of Intent, to support the Kanyika Project and contribute to advancing the Malawi Government's Agriculture, Tourism and Mining (ATM) Growth Strategy,” Ecobank Malawi managing director Dr Raymond Fordwuo said.
“This project aligns with Ecobank's purpose of driving financial integration within Malawi and across Africa.
“By backing important projects like Kanyika, we are supporting the local economy and showing our commitment to building a better future through innovative financial solutions."
In the 2024-25 national budget, Malawi Finance Minister Simplex Chithyola Banda said the government had identified three anchor sectors for their potential to contribute to economic growth.
"The anchor sectors are Agriculture, Tourism and Mining, commonly referred to as ATM,” Banda said.
"The ATM strategy will further help to boost domestic revenue in this budget; therefore, the ATM sectors will have significant allocations, and the government will focus on developing national legal and institutional frameworks for protecting natural resources.”