Metro Mining (ASX:MMI) has entered into a binding and definitive agreement with Nebari Natural Resources Credit Fund I and Nebari Natural Resources Credit Fund II for up to US$21.5 million ($33.2 million) in debt financing.
The restructuring of its debt facility and private royalty agreement comes after a competitive refinancing process.
The funds will be released via two tranches and are in addition to the existing two tranches of US$30 million under a senior debt facility agreed upon in 2023.
ICA Partners and Ashurst acted as financial and legal advisors respectively to Metro for the financing facility.
US$11.5 million will be provided to ‘buy back’ the private royalty held by Nebari, which will be converted to senior debt. A US$10 million stand-by facility has also been provided, with a minimum drawdown of US$5 million in lieu of a line fee, and the remainder able to be drawn at Metro’s option before the end of December 2025.
These two new tranches are in addition to the existing two-tranche US$30 million senior debt facility with Nebari.
Metro Mining, which has a market capitalisation of $327.55 million, says the transaction de-risks its balance sheet in the short term, reduces financing costs in 2025 by $4 million, and avoids shareholder dilution.
CEO Simon Wensley says this substantially de-risks our pathway into 2025 when the full effects of its 7 million tonnes per annum expansion will be evident, “selling into a very strong bauxite market”.
Nebari is a US-based investment manager specialising in privately offered pooled investment vehicles. Nebari Managing Partner Andre Krol says since funding Metro’s expansion, management has shown balancing of value and risk in their decision making as they deliver on their plans.
“Based on Metro’s performance and our experience with it as a borrower, Metro has earned an improved internal credit rating,” Krol says.
The discount on all tranches is priced at a 7% premium to the US Federal Reserve 90-day secured overnight financing rate, which is currently at 4.98%.
Overall, the borrowings due and payable in CY2025 have reduced from $39 million to $23 million with interest payments projected to be $9 million compared to the previous interest and royalty payments of $13 million.
All of the junior debt is expected to be paid down before the end of 2024.
Metro Mining is an independent bauxite explorer and producer focused on its Bauxite Hills Mine operating on the Weipa bauxite plateau, near the coast on the Skardon River.
Write to Aaliyah Rogan at Mining.com.au
Images: Metro Mining
