Wednesday, 9 October 2019
Walkabout Resources Ltd (ASX:WKT) has returned to trading after announcing its investors were serving up $5 million in short-term funding as it finalised a debt-based project funding facility with an international investment bank. The bridging debt was extended by unrelated investors, including non-executive director and former EY mining and metals sector leader Mike Elliott who wrote on Twitter the funding would help the company “continue momentum.” Western Australian company Walkabout will use the funds to meet operating costs and the costs of undertaking due-diligence investigations for its flagship Lindi Jumbo Graphite Project in Tanzania. Walkabout Resources executive chairman Trevor Benson reported today, “The company welcomes this financial support from our shareholders which enables us to maintain significant momentum towards the development of the Lindi Jumbo Project and to finalising the project financing. “This bridging loan, through the exercise of the options, provides a substantial component of the required equity essential to accessing the proposed debt facility.” The West Perth company believes the debt facility will save it considerable time by providing a seamless transition through its project debt and equity arrangements. Walkabout also believes the funding is a sign of high confidence in its funding strategy and project from its investors. The move will allow it to access project funding equity as investors take up proposed bridge options. Walkabout has previously reported the funding options it was considering with an international bank for its Lindi development phase included non-bank financing alternatives. What is the timetable for Walkabout’s debt facility? The company’s bridging loans will have two tranches and extend until the end of the 2019 calendar year while attracting a 14% interest rate. Tranche I of $2.967 million will be served up within five days while a $2.033 million tranche II will be extended within five days of shareholder approval of proposed “bridge options” and potential conversion of bridge debt to shares. A shareholder meeting will be called where investors can vote on the proposed motions. The proposed 35-cent bridge options would involve loan extenders being issued with five options for every $1 they had advanced to the company. The put-and-call options could raise up to $8.75 million if exercised and are expected to complement whatever equity funding option is proposed by Walkbout’s investment bank partner. Any proceeds from the exercise of listed 15-cent options that expire at the end of the year will be used to repay the $5 million loan funding. The company’s share price was at 28 cents by lunchtime. Where is the Lindi Jumbo project and how much is it worth? Lindi Jumbo project is in southeast Tanzania, 200 kilometres from Mtwara port. The graphite project is considered to be East Africa’s highest grade graphite project and was valued at US$197 million in March 2019 definitive feasibility study update, using a net present value (NPV10) calculated at a 10% discount. Walkabout’s updated costings in the DFS model predicted US$1.4 billion ($2.08 billion) of revenue for the project over a 24-year mine life. The project’s previously low development capital cost was lowered further to US$27.8 million. Walkabout has been following a financing path for the project while also engaging with the highest levels of Tanzanian government to progress the project. A US$2 million resettlement action plan approval for the project was signed off by the chief government valuator for Dodoma in Tanzania in January 2019. A mining licence for the project, ML 579/2018, was granted in 2017 following an August 2017 pre-feasibility study. Walkabout has 100% of the licence and 70-100% of adjacent graphite prospecting licences at the project. A high-grade graphite mineral reserve has been delineated in the mining licence area. The company has a binding offtake agreement with an expandable graphite producer, Inner Mongolia Qianxin Graphite Co Ltd (IMQG) and a binding term sheet to supply concentrate to a Chinese graphite products manufacturer, Qingdao Risingdawn Graphite Technology Co (QRGT) timetabled for an agreement this half-year. A final agreement with Qingdao is timetabled for the December 2019 half-year, with pricing to be determined as part of the partners’ arrangements.