European Lithium Ltd (ASX:EUR, NEX:EUR) has agreed upon a long-term debt facility of EUR7.5 million with a Swiss-based investor.
Notably, the two-year facility has a 5% interest rate, payable quarterly in arrears.
The funding facility will allow the company to complete the DFS at the Wolfsberg Lithium Project in Austria and repay the residual amount owing under the existing convertible note facility.
The company aims to become the first battery-grade lithium producer in Europe through the development of the Wolfsberg Lithium Project.
Debt deal is a good result for shareholders
European Lithium’s chairman Tony Sage said: “This is a significant milestone in the development of the Wolfsberg project as it allows us to finalise the DFS without further dilution to existing shareholders.
“We believe the repayment and extinguishment of the existing convertible facility will greatly benefit all shareholders by eliminating the issue of new shares and subsequent selling into the market.
“EUR looks forward to a mutually beneficial and long-term relationship with Helvetican International AG.”
The lender is Swiss entity H120 AG, introduced by Helvetican International AG. Helvetican will appoint a board member to the company on 1 February 2020.
Austrian authorities show support for project
The Austrian Mining Authority has extended the 11 mining licenses and 54 exploration licenses the company has over the Wolfsberg Lithium Project.
The decision is based on the company’s demonstrated success to date in developing the Wolfsberg Lithium Project, especially in the unique field of metallurgy to battery grade lithium hydroxide.
Sage added: “This is yet another significant milestone for the company in development of the project.”