Vast Resources PLC (LON:VAST), the resource development and production company, has entered into a bridging loan arrangement with Darwin Capital.
The facility is for up to £1mln, and the company has already issued a £650,000 loan note to Darwin to raise funds for working capital requirements.
Half of the principal amount of the loan note, plus any accrued and unpaid interest, will be due for redemption on 10 July, 2016, with the remainder due on 10 October, 2016.
The company has the option of retiring the note ahead of schedule, while in the event that the loan is not repaid on time, Darwin has the option to convert the debt into shares.
Vast is waiting on the funds from Crede Capital, as part of a share subscription deal announced at the start of 2016; when those come through, Vast intends to use them to pay off the bridging loan.
Interest of 20% a year is payable on the outstanding amount.
"The company has initiated several capital projects to increase both the capacity and efficiencies at the Manaila operation,” chief executive of Vast, Roy Pitchford, said in a stock market announcement released after trading had finished yesterday.
“The rejection of the Crede Tranche 2 financing has put pressure on the company's working capital requirements and the Darwin funding has been arranged as a short term bridging facility to help the company maintain the operational momentum that it has built over the past months," Pitchford said.
Shares in Vast were off 2.7% at 0.326p in the first hour of trading on Tuesday.