Graphex Mining has entered an agreement with funds managed by global private investment firm Castlelake fund Chilalo through to production.

The agreement is to raise US$5 million from the issue of secured Interim Loan Notes which becomes available immediately.

Graphex Mining has also signed a term sheet setting out the proposed terms on which the Castlelake Funds and other market participants provide up to US$40 million in equity and up to US$40 million from the issue of senior secured loan notes.

Proceeds from the Interim Loan Notes are to be used to advance the project to be able to satisfy the conditions precedent to the senior funding package.

The more material conditions, in addition to customary conditions precedent, that need to be satisfied for the senior funding package include:

  • Entry into definitive transaction documents – the term sheet for the Senior Funding Package is to be converted into transaction documents;
  • Completion of a BFS;
  • Certain Castlelake approvals and completion of ongoing Castlelake due diligence to its satisfaction;
  • Resolution of issues relating to Tanzania’s mining legislation – a detailed submission has been provided to the Tanzanian Government and Graphex Mining expects to present the submission to Government officials in the near future; and
  • Execution of material contracts including off-take, mining and EPC amongst others

Satisfaction of these conditions are required to proceed with the senior funding package, allowing the commencement of mine construction and providing a pathway to production.

The final financing amount for the senior funding package will be determined by the BFS and is expected to fund all associated costs and allowances typical for the construction of a mining project.

The term sheet calls for no more than 50% of the senior funding package to be provided by way of secured loan notes.

When all the conditions to the senior funding package have been satisfied, the company, subject to shareholder approval, will go to market for an equity raising and depending on market conditions target to limit the Castlelake Funds to 40% of the total issued
share capital.

Graphex Mining intends to provide existing shareholders with an opportunity to participate
in the equity raising on the same terms as the Castlelake Funds.

“We are pleased to have agreed to this financing transaction, which represents a major milestone for our company,” comments Graphex Mining MD Phil Hoskins.

“We can now proceed with completion of the bankable feasibility study (BFS) with a view of Graphex Mining becoming a leading supplier of premium, coarse flake graphite.

“We take great confidence from the commitment of a global private investment firm, which follows a period of extensive due diligence.

“We believe this transaction affirms the quality of the Chilalo project, the premium product it will produce, the graphite market opportunity identified by the company and confidence in the company’s ability to reach a satisfactory resolution in Tanzania,” he adds.