Hastings Technology Metals has released an update on the project financing process for the Yangibana Project, including the establishment of an at-the-market equity financing facility for up to $50 million.
During the September quarter, Hastings completed early infrastructure works at the Yangibana Project, including the Kurrbili Accommodation Village, Yangibana Airstrip, access roads, production borefields, water pipelines and clearing and grubbing of the entire plant site.
The at-the-market equity financing facility has been established with Alpha Investment Partners (AIP) to provide working capital funding flexibility as the project’s financing process is advanced.
The facility offers the company the flexibility to raise capital incrementally over a four-year period at an issue price referable to prevailing market prices, subject to a floor price that is set by Hastings.
Hastings retains full control over all major aspects of the placement process, having sole discretion as to whether to use the facility, the number of shares to be issued, and the minimum issue price of any issued shares.
The final issue price will be calculated as the greater of a floor price set by Hastings in the drawdown notice and a volume weighted average price over a period of Hastings’ choosing (at the sole discretion of Hastings) less a discount of five per cent. The facility establishment fee is $25,000.
Furthermore, the at-the-market facility will not impose restrictive conditions, preserving the company’s operational and capital raising freedom.
As collateral for the at-the-market facility, Hastings will issue 6.5 million shares to AIP from its LR 7.1 capacity, leaving a balance of 12.9 million capacity under LR 7.1. Any placements under the facility in excess of Hastings’ LR 7.1 capacity will require shareholder approval.
Hastings has said that this standby equity capital facility aligns with its commitment to prudent financial management, facilitating a controlled approach to capital raising, and minimising shareholder dilution. The facility can be terminated by Hastings at any time without penalty to the company.
Hastings has completed the first stage of the project financing process following the release of its staged development feasibility study, including first stage financiers’ investment and credit committee approvals.
This has culminated in the company receiving non-binding indicative financing proposals from multiple parties, including from global mining funds, senior debt and fixed income investors (debt capital markets) to fund the Yangibana Project in the order of the target gearing ratio of 60 per cent of the total funding package.
This is in addition to the previously announced financing support from commercial banks and government agencies.
The receipt of the financing proposals follows completion of lenders due diligence reports, including an independent technical expert report from Behre Dolbear Australia (BDA), which confirmed that the Yangibana Project’s revised capital and operating cost estimates and project delivery structure and schedule are reasonable and appropriate for a project of this nature.
Additionally, Hastings has received various strategic partner and joint venture proposals from global mining funds which would reduce funding requirements, as well as enable the company to leverage synergies, share risks, and access additional resources and expertise of a partner.
With the receipt of multiple financing proposals including loans, bonds, and joint venture proposals, Hastings has said it is now in the process of negotiations to secure the most optimal financing package and syndicate that enhances long term value creation for shareholders.
According to the company, it is working with its financial advisors and consultants to shortlist preferred financiers/syndicated lender groups to conduct final due diligence and site visits, with final submissions due shortly thereafter.
Hastings’ Executive Chairman, Charles Lew, said that securing multiple indicative funding proposals is a significant milestone.
“We are pleased by the strong response we have received from various potential financiers validating the economic and technical viability of the Yangibana Project,” Mr Lew said.
“As we evaluate each option, we are focused on choosing the path that best aligns with our strategic objectives and drives the best economics for the business.
“As we work towards finalising the funding stack, we will continue to look at opportunities to optimise our working capital and operating efficiencies to deliver value for our shareholders.”