Shares in Kibo Mining PLC (LON:KIBO) nudged higher as it renegotiated terms of its £1.5mln loan with Sanderson Capital Partners, which sees the latter take an equity stake in the Mbeya coal-to-power project (MCPP) in Tanzania.
Kibo had been required to pay back the loan in either cash or shares by August 31.
Instead, Sanderson will convert the loan no later than September 14 into a 2.5% equity interest in Mbeya Development Company Ltd, which is a 100% subsidiary of Kibo.
Kibo is also issuing Sanderson with £150,000 worth of Kibo shares, at the prevailing Kibo share price on the conversion date, as a conversion fee.
Significantly, Sanderson will grant Kibo access to a new £600,000 standby loan facility until February 28 next year, on similar terms to the existing facility.
Kibo chief executive Louis Coetzee welcomed the renegotiated settlement terms for Sanderson loan.
"This will relieve pressure on our working capital position and significantly enhance our ability to expedite the remaining MCPP development work. It also avoids further dilution in Kibo's equity as a consequence of costs incurred in the development of the MCPP.
"The renegotiated settlement terms for the facility also set the first independent baseline for the current value of the MCPP and marks the first direct equity investment in the project.
"Following the announcement of our re-negotiated agreement with SEPCO, we believe this represents another significant endorsement of the financial viability of the MCPP and will further bolster confidence in the project as we move towards financial close."
Shares gained 2.44% to stand at 5.25p.