Nickel Industries (ASX:NIC) reports its Indonesian joint venture has signed a US$245 million ($349 million) non-recourse facility to support the ramp-up of the Excelsior Nickel Cobalt (ENC) High-Pressure Acid Leach (HPAL) Project.
PT Fajar Metal Industry (FMI) owns the ENC Project within the Indonesia Morowali Industrial Park. The ENC JV owns FMI outright, and Nickel Industries holds a 46% interest in that JV.
Oversea-Chinese Banking Corporation arranged and led the facility, which comprises a US$220 million amortising term loan and a US$245 million working capital facility. The tenor is seven years from first drawdown, with a margin of 2.00% per annum above the secured overnight financing rate (SOFR). Lenders hold security over FMI’s project assets only.
Covenants include a maximum net debt-to-EBITDA ratio of 3.0x. Drawdown remains subject to customary conditions precedent.
Under the terms of the facility, FMI can distribute term loan proceeds to its shareholders. Nickel Industries will receive 46% of any distribution and plans to use the funds for general corporate purposes.
Nickel Industries’ equity accounts for its ENC interest, so the company notes that the facility does not enter group debt or affect existing group financial covenants.
An accordion feature allows the term loan to increase, potentially up to US$800 million. FMI remains in discussion with other banks about joining on the same terms, and Nickel Industries says it will update the market if further lenders join.
Managing Director Justin Werner says the terms reflect the quality of the asset.
“Securing a non-recourse project financing on these terms, in what has been a difficult year for the HPAL sector, reflects the quality of the asset and our partners,” Werner says.
“The facility strengthens ENC’s funding position as it ramps up towards nameplate capacity, without adding to Nickel Industries’ group debt.”
ENC is in commissioning and is expected to produce more than 72,000 tonnes of nickel metal a year.
Nickel Industries is a mining and downstream processing company operating major assets in Indonesia.
Write to Paula Fabe at Mining.com.au
Main image: Nickel Industries
