Andromeda Metals Ltd (ASX:ADN, OTC:ANDMF)has received credit approval for a A$75 million debt facility from Merricks Capital to advance the development of its Great White Project in South Australia. The facility includes principal, interest, fees, reserves, and a cost overrun tranche and represents a key step toward finalising the Stage 1A+ development.
Negotiations for binding financing documentation are now underway, with completion subject to standard conditions precedent including securing the balance of required funding.
“Receiving confirmation from Merricks Capital that the proposed facility is credit approved, following extensive due diligence, represents a significant milestone in the financing of Stage 1A+ of the Great White Project,” acting chief executive officer Sarah Clarke said.
“This outcome is a strong endorsement of the project’s quality and a testament to the team’s dedication, expertise and commitment to delivering an investment ready project.”
Facility terms and structure
The A$75 million facility carries a tenor of 78 months from financial close. Amortisation will begin after a 12-month grace period post-development completion, concluding with a 50% bullet repayment at maturity.
Interest is payable on drawn funds, with line fees applied to undrawn amounts. Security and covenant conditions are aligned with conventional debt arrangements of this nature, including cover ratios and minimum cash balances.
Should financial close be achieved and shareholder approvals granted, Merricks Capital is expected to receive 400 million equity warrants. These will be priced at a 10% premium to the share price in the balance of development funding and expire upon final facility repayment.
Due diligence and next steps
The credit approval follows detailed due diligence by Merricks Capital across the technical, financial, legal, market, environmental and social aspects of the Great White Project. Pareto Securities acted as financial adviser during the process.
With this milestone reached, Andromeda is now focused on securing additional funding required for a final investment decision and financial close, while continuing due diligence with selected capital providers.
Andromeda raises $5 million
In late May, Andromeda secured A$5 million through a placement to institutional and sophisticated investors, bolstering its pathway to a FID for the Great White Project.
Shares were issued at A$0.013 each.
Proceeds from the raise have gone towards early works on the Great White Project, finalising plant design, and covering key legal, technical and financial due diligence activities required for project financing. Funds will also contribute to a scoping study for a potential high-purity alumina (HPA) project and provide general working capital.
Read more: Andromeda Metals completes $5 million placement, sharpens focus on Great White and HPA
Following the placement, Andromeda held approximately A$9.5 million in cash, enabling continued progress toward FID.
MST Access senior analyst Michael Bentley described the Great White Project as “largely de-risked”, noting that most long-lead items have been secured, key permits granted and offtake agreements signed.
“Final project funding is the key catalyst for a material re-rating,” Bentley said. He values Andromeda at A$0.13 per share, compared to its current price of around A$0.011.
“We also believe that a cornerstone investor may well pay a premium to the current share price to take a significant share of the company,” Bentley added.