Emerging heavy mineral sands developer Strandline Resources has achieved another important step towards the development of the Fungoni heavy mineral sands project in Tanzania by signing a US$26 million project finance facility agreement with Nedbank CIB.
The facility would account for the majority of Fungoni’s total estimated capital cost of $35 million, including taxes, levies and excluding financing costs.
During 2019, Nedbank conducted detailed due diligence of technical, financial, market, legal, environmental and social fundamentals and has since progressed compilation of documentation for the facility.
In view of the current evolving COVID-19 pandemic, the parties will also continue to evaluate the potential impact of the pandemic on the project fundamentals and the outcome of this evaluation will lead into Strandline and Nedbank’s final investment/credit decision to proceed with the construction of the project prior to financial close.
All parties are now working towards satisfaction of conditions precedent to financial close and first draw down. This includes finalising the additional finance documents with Nedbank, obtaining the remaining government related approvals (including completing documentation for the Tanzanian government’s 16% free-carried interest in the project company, compensation and resettlement agreements and access arrangements in relation to the project site), as well as satisfying the equity shortfall.
As part of this equity raising process, Strandline is in discussions with international finance institutions about strategic equity investment in Fungoni and/or the company.
Strandline Resources MD Luke Graham said signing of the Nedbank facility agreement is an important achievement and enables Strandline to continue to advance Fungoni towards a development decision.
With key mining and environment licences in place, the DFS completed, offtake contracts secured for 100% of forecast product revenue, major construction contracts executed and the Nedbank debt facility agreement now signed, Strandline remains on track to develop its first project in Tanzania and capitalise on the forecasted strong mineral sands market.
The Fungoni project, as confirmed in the DFS, is an exceptional “starter” project for Strandline in the emerging mineral sands province of Tanzania.
The project will deliver strong financial returns, including EBITDA of $115 million, from the production of premium-quality zircon and titanium products.
Fungoni is expected to pave the way for development and value appreciation of Strandline’s other mineral sands projects in Tanzania, including the large-scale Tajiri project.