Andromeda Metals Ltd (ASX:ADN, OTC:ANDMF) advises that it now has all the elements in place to progress funding discussions as the company progresses towards a final investment decision for its Great White Project in South Australia.
Since announcing its revised commercial strategy in May 2023 to focus on established kaolin markets, the company has worked to deliver the key elements required for funding of the project and a final investment decision.
The company estimates that capital expenditure for Stage 1A+ of the project is $84 million. It notes that the ultimate final funding requirement will be reduced by a portion of the capital expenditure incurred prior to a final investment decision and increased by working capital expected during the planned development period.
After considering these elements, Andromeda anticipates a funding requirement of $90 million — excluding financing costs, interest and cash reserves.
The company is considering debt-to-equity structures of up to two-thirds debt to one-third equity, as well as alternative financing structures such as royalties.
Debt financing
Last June, Andromeda announced it would open a dataroom for debt-only investors for a 55,000 tonnes per annum (tpa) project (Stage 1A). Discussions with potential offtake parties have since led to an anticipated increase in offtake demand.
As such, the company decided to bring forward the staged expansion of the project, with production for the first stage increasing from 55,000tpa in Stage 1A to 100,000tpa (Stage 1A+). This improved capital efficiency and financial outcomes, and better supported discussions with potential funding parties.
Andromeda has now delivered all the anticipated key elements to support a funding process for Stage 1A+ including the completion of a bankable feasibility study and its review by independent technical engineer, Behre Dolbear, and the signing of binding offtakes that underpin production from Stage 1A+.
The company is now in discussions with multiple potential debt financiers, including government funding bodies, banks, and private credit institutions, all of whom are active in the data room.
Equity funding
In addition to the debt funding, Andromeda is seeking cornerstone equity investors to support the development of the project.
With all offtakes now in place for Stage 1A+ and the previously announced support from Traxys for production expansion, the company has appointed leading Australian corporate advisory firm Azure Capital to secure cornerstone equity to support the development funding. This process will be run in parallel with the debt funding process.
Board and executive changes
In a separate announcement to the ASX today, Andromeda advised that Luke Anderson has resigned as chief executive officer and managing director, effective today.
Anderson determined that “the current state of his health is incompatible with the needs of the company and its shareholders”.
As a result, Sue-Ann Higgins has assumed the role of executive chair and Sarah Clarke has been appointed acting CEO, until a suitable replacement is found.
Sue-Ann Higgins said: “Although Luke’s decision is regrettable, the company now has all the key elements in place to progress funding discussions, combined with a board and management with the skills and experience to progress funding discussions to a final investment decision and to bring the Great White Project into development. We wish Luke all the best.”
Luke Anderson said: “I wish the company all the best in the development of the Great White Project. My decision is not a reflection of the high-quality resources of the company, or the strong economics underpinning the project, as reflected by the recently completed bankable feasibility study.”