Australian lithium-tantalum producer, Pilbara Minerals Limited, has announced a refinancing of its existing debt facilities to support its long-term growth.
The company has secured binding commitments from leading international bank, BNP Paribas, and Australia’s specialist clean energy investor, the Clean Energy Finance Corporation (CEFC) to provide a senior secured US$110M Finance Facility.
Proceeds will be applied to redeem the existing US$100M Nordic Bond, which was used to fund the Stage 1 development of the Pilgangoora Lithium-Tantalum Project including reimbursement of the principal repayment (US$6.25M) and interest payment (US$3M) made to bondholders in June 2020.
The proceeds will also contribute towards the early redemption premium payable under the Nordic Bond (US$4.5M), as well as related transaction costs.
Pilbara Minerals notes that the participation of both BNP Paribas and the CEFC in the new Finance Facility reinforces their existing strong relationships with the company, with both parties existing lenders to the Pilgangoora Project.
BNP Paribas has committed to providing US$73.3M of the Finance Facility with the CEFC contributing the remaining US$36.7M, for a total of US$110M.
Binding terms have also been received from BNP Paribas to extend the undrawn US$15M Working Capital Facility originally established in 2018.
The establishment of this US$110M Finance Facility represents the culmination of the process outlined in Pilbara Minerals’ March 2020 Quarterly Activities Report to evaluate funding options that could ultimately ease the cashflow impact of the Nordic Bond, including reducing the 12 per cent cost of funding attached to the Nordic Bond.
Pilbara Minerals advises that when the Nordic Bond was established in 2017 to finance the construction and development of Stage 1 of the Pilgangoora Project, its terms and conditions were appropriate and representative of market offerings for secured debt financing of lithium development projects at that time.
Since then, the company has successfully managed the construction, commissioning, ramp-up and optimisation of the Stage 1 Pilgangoora Project, establishing itself as a reputable global lithium and tantalum producer. This has enabled them to attract a range of new and competitive funding opportunities.
The Finance Facility being provided by BNP Paribas and the CEFC will deliver Pilbara Minerals with an extended grace period before quarterly principal repayments commence in September 2022, providing the company with greater flexibility to manage its cash flows during the current soft market conditions, which have been exacerbated by the COVID-19 pandemic, it says.
Pilbara Minerals’ Managing Director and CEO, Ken Brinsden, said: “This landmark refinancing of our long-term debt facilities is an outstanding achievement for Pilbara Minerals, representing the first time that a lithium raw materials player of our size has attracted conventional, syndicated project financing at such a competitive cost.”
“We are very pleased with the continued support of both BNP Paribas and the CEFC, which clearly demonstrates their ongoing commitment to a long-term partnership with the company to support our growth ambitions and sustainability objectives,” Mr Brinsden said.
“The new facilities are offered on very competitive terms, putting us in a very strong position to ride out the current soft market conditions and capitalise on the rebound in the lithium market, when that inevitably occurs.”
“It reflects the quality and scale of the Pilgangoora Project, as well as our success in building, commissioning and ramping-up the Project to secure our position as a sustainable and reliable long-term supplier of lithium raw materials to some of the key players in the global lithium battery supply chain.”
“In recognising the importance of minimising our impact on climate change, we are now embarking on a pathway to achieve net-zero emissions at our operations, an objective that goes to the heart of who we are and our purpose.”
“I would also like to take this opportunity to thank the participants in the original Nordic Bond for their confidence in Pilbara Minerals back in 2017 and their financial support. I look forward to continuing our strong working relationship with the CEFC and BNP Paribas as we operate, grow and diversify our business in the years to come,” Mr Brinsden concluded.
The Finance Facility and Working Capital Facility have been approved by Pilbara Minerals’ Board based on credit approved terms and are subject to formal documentation and customary conditions precedent to drawdown, including the redemption of the Nordic Bond in accordance with its terms.
The company expects to be able to draw down on the Finance Facility following completion of documentation and satisfaction of conditions precedent during the current quarter. The full announcement can be found online here.