Base Resources (ASX: BSE) has achieved the financial close on the US$170 million project debt facilities and the first drawdown of US$52 million has been completed.
Base has now achieved a critical milestone in the development of the Kwale Project as the company now has access to the full funding required to complete the development of the project - and bring it to positive cashflow.
Project construction continues to be on schedule for practical completion in the September quarter of 2013, with the first shipment in the December quarter 2013.
Importantly - Base has already secured off-take arrangements for 70% of project revenue
Two pilot plant operations at Kwale provide confidence in processing behaviour and indicate a suite of readily marketable products. The project’s high value mineral assemblage and low stripping ratio result in a projected revenue to cash cost ratio that would place Kwale in the top quartile of world producers.
Achieving financial close
Achieving financial close on the debt facility is the product of a strong collaborative effort between Base and a very supportive group of Lenders with co-operation from the Government of Kenya.
Endeavour Financial, a London based debt advisory firm, have played a crucial role in coordinating the process to achieving first drawdown.
Under the terms of the debt facility, subsequent drawdowns will be made on a quarterly basis with the next scheduled for February 2013.
Update on Minimum Local Equity Participation Regulations
As previously advised by Base, the company said that they have clear legal advice from two leading Kenyan law firms that the regulation recently introduced by the Minister of Environment and Mineral Resources that seeks to mandate a 35% minimum Kenyan equity participation in mining licenses cannot be legally applied to the Special Mining Lease No. 23 covering the Kwale Project.
This advice has been corroborated by the Lender’s legal advisers.
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