Walkabout Resources Ltd (ASX:WKT) has taken another step towards the start of graphite production at the under-development high-grade Lindi Jumbo Project in Tanzania with the Gemcorp Investment Committee approving a US$20 million debt facility.
The committee has provided final approval for the US$20 million transaction facility plus US$5 million standby facility, which is subject to the formal loan documentation.
This documentation is being prepared and is well-progressed, with both parties intending to complete as soon as possible.
Initial drawdown this month
The initial drawdown of senior debt funds will be available on the completion of loan documentation, which is expected this month.
Walkabout Resources CEO Andrew Cunningham said: “We are excited that the senior debt facility is nearing completion.
"The advanced development stage and high product margins expected from Lindi Jumbo, allows us to access high-yield debt that other projects cannot."
"Such a facility also allows to deliver on shareholders expectations of full project funding while minimising potential dilution.”
About Lindi Jumbo
Walkabout is developing the high-grade Lindi Jumbo Graphite Project in southeast Tanzania to take advantage of forecast market conditions for large and jumbo flake graphite products.
The company holds 100% of a Mining Licence and between 70% and 100% of adjacent graphite prospecting licences at Lindi Jumbo with an enduring option to acquire the remaining 30% share.
A high-grade graphite mineral reserve has been delineated within the Mining Licence area.
Debt facility terms
The senior debt facility with Gemcorp will be over a three-year period, consisting of high yield interest and the lender being entitled to a percentage of free cashflow, after debt servicing for the period.
This structure provides Gemcorp with some Lindi Jumbo upside participation while avoiding equity dilution to shareholders.
The facility will be subject to a number of standard financial covenants including debt service cover.
Use of funds
Funds from the senior debt facility will primarily be used to refinance existing interim funding measures, which have substantially funded the construction costs since February of this year.
The remainder of the facility will be used to complete construction costs, fund commissioning and provide working capital for the company and Lindi Jumbo.
Other projects
In addition to the advanced Lindi Jumbo Project, Walkabout is also exploring in southwest Tanzania at the Amani Hard Rock Gold Project.
The company has also acquired an exciting exploration portfolio for gold and base metals in Scotland and Northern Ireland and is conducting exploration in these areas.