Sierra Rutile has refinanced its debt facilities through Nedbank Corporate and Investment bank, thereby consolidating all previous debt facilities into a single senior term loan facility of US$50 million and an equipment finance facility of $15.9 million.
A revolving credit facility of $15 million has also been arranged to provide Sierra Rutile with additional liquidity.
Sierra Rutile said its loan from the government of Sierra Leona, which is denominated in Euros and equivalent to $23.5 million, will be repaid at financial close of the refinancing. The covenants attached to the new debt facilities provide greater flexibility than previous covenants and are customary for a suite of corporate-style debt facilities of this nature.
The senior term loan facility carries an interest rate of Libor plus 6.25% and its final maturity is December 2021. It can be extended from $50 million to $85 million to provide additional funding for future development projects, such as the debt component of the Sembehun project, subject to final project feasibility and customary conditions.
The equipment finance facility allows Sierra Rutile to take advantage of current soft mining equipment market conditions and optimise the current mobile mining fleet ahead of mid-life rebuilds at competitive debt terms, lowering sustaining capital requirements. This facility carries an interest rate of Libor plus 4.50% and its final maturity date is December 2019.
The revolving credit facility of US$15.0 million has been arranged to provide additional liquidity, should the need arise. The final maturity date of this facility is December 2019 and an interest rate of Libor plus 6.50% is charged on drawn balances under this facility.
“I am delighted to announce the refinancing of our loan facilities into a long term debt structure that better supports our stated development plans,” says Sierra Rutlie CEO John Sisay.
Sierra Rutile, the multi-mine mineral sands company, is operating assets and developing a portfolio of growth projects in the south west of Sierra Leone.
The company is currently in the process of being acquired by Australian mineral sand miner Illuka Resources.
The acquisition would be implemented by merging Sierra Rutile with Iluka Investments (Iluka Newco), a wholly-owned incorporated subsidiary of Iluka International (West Africa).
As part of the acquisition, Sierra Rutile shareholders would receive 36 pence cash for each Sierra Rutile share.
Moreover, Iluka Resources has agreed to also assume Sierra Rutile’s debt.
The acquisition is expected to approximately double Iluka’s rutile resource base and secure ownership of an operation, with a long history in the minerals sands industry that currently produces approximately 130 000 t of rutile, with expansion potential up to 240 000 tpa.