Johannesburg - Kibo Mining on Wednesday entered into a binding term sheet with the US-based asset managers, Sanderson Capital Partners, for a new $2.94 million forward payment facility to be paid in five tranches between now and June 2017. This comes after the Tanzania-focused mineral exploration and development company in March raised £1.5 million through an interest-free loan arrangement with Sanderson to complete a definitive feasibility study for the proposed Mbeya coal-to-power project (MCPP).
Kibo is on the brink of developing a 250-350 MW mouth-of-mine thermal power station in its power and coal mine elements the MPCC in south-western Tanzania.
This new facility provides for Kibo to be advanced part of the $3.67 million development cost recovery, payable to the company by SEPCO III on achieving financial close of the MCPP as announced by the company in October.
As a result, Kibo would issue new ordinary shares to Sanderson to the value of $732 036 over the 30 days while Sanderson would have the right to convert up to £1.5 million of the amount drawn down on the facility into Kibo shares.
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CEO Louis Coetzee said it was pleased with the facility because it would allow the mining company to create short- to medium-term funding certainty in a market that remained challenging for capital raising.
Coetzee said the facility would also provide Kibo a funding solution with minimal dilution to shareholders.
"The funds which have been made available will satisfy the company's cash requirements for a significant time, allowing management to focus all their time and energy on bringing the MCPP to a successful financial close as early as possible in 2017, as well as concluding the Opera transaction and complete the planned feasibility work on the Imweru gold project as scheduled," Coetzee said.