Flinders Mines Limited (ASX: FMS) (Flinders or Company) advises that it has entered into a loan facility agreement (Loan Facility) with PIO Mines Pty Limited, a subsidiary of the Company's major shareholder TIO (NZ) Limited to continue the progression of its Pilbara Iron Ore Project. Both PIO Mines and TIO are subsidiaries of Todd Corporation.
The short term Loan Facility is for a total of A$5.0 million to assist Flinders in completing the maturation phase of its Pilbara Iron Ore Project, and to meet short term capital requirements. The Facility is available for drawing in two tranches: Tranche 1 for $3,000,000 is available for immediate draw down until 10 November 2017, and Tranche 2 for $2,000,000 is available for draw down between 15 January and 15 February 2018.
The Loan Facility is unsecured and was struck on attractive commercial terms including an interest rate equivalent to the 6-Month Bank Bill Swap Rate (BBSW) Mid-Rate plus 2% per annum with the repayment of the principal outstanding to occur on or before 30 June 2018. Flinders may voluntarily prepay any of the principal outstanding at any time before 30 June 2018. Key loan terms are summarised in the annexure to this announcement.
Mr Neil Warburton, Chairman of Flinders, said ""The asset maturation phase is an important step we are undertaking to de-risk the Pilbara Iron Ore Project and maximise its value ahead of a proposed rights issue next year to progress the development of the project."The Board considered a range of funding options to complete the maturation work and decided that an unsecured loan was the optimal approach for the business and all shareholders given our future funding plans."
Flinders proposes to undertake a pro rata rights issue following the completion of the maturation work before the end of the 2018 financial year to repay the Loan Facility, progress feasibility and mine scheduling studies, and supplement working capital requirements. The issue price and entitlement ratio will be determined at the time and will allow all shareholders to participate.
Further, Flinders and TIO have entered into a subscription agreement under which TIO has agreed to subscribe for the number of Flinders' shares under the Rights Issue equal to the lesser of its pro rata entitlement and any amount of the Loan Facility principal outstanding divided by the subscription price subject to (amongst other things):
final TIO board approval once the terms of the Rights Issue are determined; and
launch of the Rights Issue no later than 30 June 2018.
Flinders Mines Limited ABN 46 091 118 044
45 Ventnor Avenue West Perth
Western Australia 6005
Phone +61 8 9389 4444
facsimile +61 8 9389 4400 www.flindersmines.com
For further information please contact:
Shareholders MediaDavid McAdam Kat Fremlin
Interim Executive Director Brand One
(08) 9389 4483 Media Relations 0451 354 858
About Flinders Mines LimitedFlinders Mines Limited is an ASX-listed (ASX: FMS) exploration and development company focused on the commercialisation of its large, high quality hematite resource - the Pilbara Iron Ore Project (PIOP).
ANNEXURE Loan Agreement Summary of Key TermsBorrower | Flinders Mines Limited (ACN 091 118 044). |
Lender | PIO Mines Pty Limited (ACN 605 697 461). |
Loan Amount (the Commitment) | Tranche 1 - A$3,000,000 Tranche 2 - A$2,000,000 |
Security | The facility is unsecured. |
Availability Period | Tranche 1 available for draw down from the date of the agremeent until 10 November 2017; and Tranche 2 available for draw down between 15 January 2018 and 15 February 2018. |
Termination Date | 30 June 2018 |
Payment of Interest | Interest is payable on the Termination Date. The interest rate is the 6-Month Bank Bill Swap (BBSW) Mid-Rate plus 2% per annum. |
Repayment of Principal | The Borrower must repay the principal outstanding (being the amount of the Commitment) on the Termination Date. The Borrower can voluntarily prepay any of the principal outstanding at any time before the Termination Date. After the date of the Loan Agreement, any net proceeds from any funds raised by the Borrower (whether in the form of debt or equity) must, within 7 Business Days of receipt, be applied towards prepaying the principal outstanding and any other moneys owing under the Loan Agreement. |
Use of Funds | The funds drawn under the loan must be used to meet the Borrower's payment obligations under existing agreements as and when they fall due, to complete all work programmes associated with the Maturation Work undertaken at the Pilbara Iron Ore Project (as announced to ASX on 27 July 2017 and 25 September 2017), including site activities, associated test work and future feasibility studies from those work programmes, and to otherwise assist with |
its ongoing working capital requirements and any other purpose that the Lender approves. | |
Conditions Precedent to Drawdown | The Lender is not obliged to provide loan funds until the following conditions are fulfilled to the Lender's satisfaction:
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Representations and Warranties | The Loan Agreement includes representations and warranties given by the Borrower in favour of the Lender which are typical for agreements of this nature. These include representations regarding the Borrower being duly incorporated, having corporate power and authority to enter into the Loan Agreement and that the transactions under the Loan Agreement constitute binding obligations on the Borrower and are permitted under its constitution and under law. |
Other Key Undertakings | The Loan Agreement contains certain restrictions on the conduct of the Borrower's business, including undertakings to:
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Flinders Mines Limited published this content on 06 November 2017 and is solely responsible for the information contained herein.
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