Walkabout Resources Ltd (ASX:WKT) (FRA:N6D) has secured a U$20 million debt funding facility with CRDB Bank PLC, achieving a major milestone in its progress towards construction of the Lindi Jumbo Graphite Mine in Tanzania.
Lindi Jumbo Limited, a wholly-owned subsidiary of Walkabout, and CRDB Bank PLC have signed a project finance facility letter for the construction of the mine.
CRDB is the largest, wholly owned private bank in Tanzania and is listed on the Dar es Salaam Stock Exchange.
The debt facility will be executed between Lindi Jumbo and CRDB with Walkabout providing necessary guarantees and equity loans to support the full funding package.
62.5% of project cost
The total cost for the Lindi Jumbo Graphite Mine is estimated to be around US$32 million and the debt facility will meet 62.5% of the project cost.
Walkabout has already spent US$3.6 million on construction activities at the site and long-lead manufacturing items.
Walkabout managing director Allan Mulligan said: “We are delighted to have CRDB Bank as the Lindi Jumbo project financing partner.
“We were very keen to meet not just the requirements of local content but the spirit as well and the CRDB facility accomplishes this.”
Cost of funding reduced
During 2020, CRDB conducted detailed due diligence of technical, financial, market, legal and environmental elements of the Lindi Jumbo Project resulting in the provision of the offer of this debt facility.
Mulligan added: “We have persisted with negotiating this funding facility for more than a year.
“The relationship benefits Tanzania in growing its services sector and benefits our company, as the cost of funding reduces significantly in terms of sovereign risk premiums.
“The provision of this significant debt package for Lindi unlocks the final milestone in project development and construction efforts at the mine site can commence as soon as formal documents have been executed.”
Government support
The debt facility remains subject to finalisation of all finance documents and conditions precedent, and Lindi Jumbo will be the first non-Chinese graphite mine to receive debt funding.
Importantly, the government of Tanzania continues to show its full support for the commercialisation of the Lindi Jumbo Graphite Project.
Mulligan said: “This will represent the first serious construction effort of a mining project in Tanzania since the 2017 Mining Act amendments.
“The Project has assessed any potential Covid delays, and we have introduced suitable travel and safety systems to mitigate risk.”