Evolution Energy Minerals’ (ASX:EV1) 84% owned subsidiary Kudu Graphite has signed a non-binding term sheet with ARCH EM (GSY) PCC for a US$2 million commitment.
The funds will strengthen the balance sheet of Kudu and support asset related expenditure.
Evolution Energy says there is no guarantee that a binding agreement will be reached and therefore no certainty the transaction will occur.
The ARCH commitment will take place through the issue of secured convertible loan notes issued in integral multiples of no more than US$250,000, with a 24-month conversion period from the date of the first draw down.
Kudu will pay an annualised 1% fee on any undrawn amount semi-annually in cash or PIK notes together with a 5% arrangement fee on the US$2 million to be paid on the date of the first drawdown of notes in cash or PIK notes.
Interest payable will be Secured Overnight Financing Rate (SOFR) plus 10% per annum accruing daily and compounding semi-annually for all notes, including the commitment fee, paid in cash or PIK notes.
The issue of the notes is subject to the receipt of relevant ARCH approvals, finalising and executing the longform documentation and Evolution obtaining required Shareholder approvals.
Executive Director Craig Moulton says this material financial commitment by the company’s major shareholder ARCH demonstrates their confidence in the quality of the Chilalo Graphite Project, and its project development.
“These funds will also ensure the future viability of the Company and will enable us to focus on accelerating project development. We will also pursue previously announced value accretive project acquisitions in Africa,” Moulton says.
Write to Adam Orlando at Mining.com.au
Images: Evolution
