American Pacific Borate and Lithium Ltd (ASX:ABR) has executed an indicative term sheet for US$45 million project financing with Amvest Capital Mining Opportunities for the Fort Cady Borate Project.
The New York based private equity fund will fund Phase One A of the California-based borate project.
Amvest’s financing facility will comprise of a US$37 million construction term loan and a US$8 million cost overrun facility.
In addition, Amvest has agreed to subscribe for US$2 million of ABR convertible notes.
Importantly, the new financing deal is very significant in ABR’s progress to be in construction by the end of the year on a fully permitted, fully financed basis.
Location of the Fort Cady and Salt Wells Projects in the US
ABR chief executive officer and managing director Michael Schlumpberger said: “We are delighted to have signed a term sheet with a specialist mining New York-based investor for a facility to substantially debt fund the first phase of our Fort Cady Borate Project.
“The convertible note and term sheet confirm our view that we have a very exciting project with exceptional financial metrics, which will produce two commodities with compelling market dynamics.
“Importantly, our focus continues to be on completing our engineering to enable the commencement of construction in the current calendar year.”
Minimal equity dilution
The equity upside for the proposed debt is 10 million ordinary shares and 15 million options at 30 cents - effectively representing about 8% of ABR.
This demonstrates a path to financing Stage One A of the mine and path to production with minimal equity dilution.