Kropz has entered into a new conditional convertible equity facility of up to ZAR 200 million, with ARC Fund, the Company’s major shareholder, in order to deliver the Company’s Elandsfontein phosphate project to first revenue.
The New ZAR Equity Facility is in addition to the US$ 5 million facility which ARC and the Company entered into in February 2021.
US$ 600,000 remains undrawn on the Existing US$ 5 million Equity Facility.
As previously announced, a funding shortfall of approximately US$ 8.5 million was expected in respect of the commissioning and ramp-up of Elandsfontein in Q4 2021 and Q1,2022, before first revenue from the sales of Elandsfontein rock is expected in mid-Q1 2022.
Kropz had secured a convertible loan facility of up to US$ 40 million from ARC in June 2020, to be used exclusively for the development of Elandsfontein. At the time of concluding the Original Equity Facility, the exchange rate was well above ZAR 17 / US$ and budgets and cashflows were calculated based on that ZAR exchange
Due to the strengthening of the ZAR to the US$ since mid-2020, ZAR drawdown receipts in South Africa were well below the ZAR 680 million anticipated at the time of concluding the Original Equity Facility.
In addition, interest receipts on surplus cash invested generated less than expected interest receipts due to lower interest rates as a result of the COVID-19 pandemic and factoring in delays to commissioning in late Q4,2021 and to subsequent first ore sales, have led to the anticipated shortfall.