Tri-Star Resources Plc Correction : Update on SPMP
January 03 2020 - 12:45PM
UK Regulatory
TIDMTSTR
The following amendment has been made to the 'Update on SPMP' announcement
released on 3 January 2020 at 07.00am under release reference number
PRNUK-0301200654-C8D6.
The previous version of the announcement incorrectly stated that "SPMP is
currently in technical default of its current banking facility arrangements
with Bank Nizwa and Al Aziz Bank as the most recent repayment obligation has
not, as yet, been met." and "As part of the current SPMP facility arrangements,
on 15 March 2018 each shareholder in SPMP entered into a conditional completion
guarantee (the "Guarantee") in favour of Bank Nizwa and Al Aziz Bank." The
names of the banks are in fact 'Bank Nizwa SAOG' and 'Alizz Islamic Bank SAOG'.
These sentences should have read "SPMP is currently in technical default of its
current banking facility arrangements with Bank Nizwa SAOG and Alizz Islamic
Bank SAOG as the most recent repayment obligation has not, as yet, been met."
and "As part of the current SPMP facility arrangements, on 15 March 2018 each
shareholder in SPMP entered into a conditional completion guarantee (the
"Guarantee") in favour of Bank Nizwa SAOG and Alizz Islamic Bank SAOG."
All other details remain unchanged, and the full amended text of the
announcement is set out below.
Tri-Star Resources PLC / AIM: TSTR / Sector: Natural Resource
3 January 2020
Tri-Star Resources plc ("Tri-Star" or the "Company")
Update on SPMP
Tri-Star Resources plc (AIM: TSTR), the minerals processing company, announces
an update on its investment in Strategic & Precious Metals Processing LLC
("SPMP") an antimony and gold production facility in the Sultanate of Oman in
which the Company holds a 40% equity interest. The other joint venture partners
are The Oman Investment Fund (40% equity holder) and DNR Industries Limited,
part of Dutco Group in Dubai (20% equity holder).
Funding of Tri-Star
As previously announced, SPMP has been in the process of seeking further
financing in order to ramp up operations at its antimony and gold production
facility in Oman, targeting 100% capacity by the end of 2020 and securing its
long- term operation. The board of SPMP has determined that in order to reach
100% capacity and sustainable positive cash flow, SPMP will eventually require
up to USD160 million of additional finance, including a working capital
facility of USD60 million to fund a build-up in inventories, a normal creditor
and debtor cycle, the continued investment in the plant and to meet current
debt obligations.
SPMP has considered several different combinations and types of finance
including debt, mezzanine and equity funding and although negotiations with
various potential providers of finance continue, the terms offered to date are,
in the view of the board of Tri-Star, unacceptable. It is also the board of
Tri-Star's view that any such provider of further finance to SPMP will require
comfort that the total funding required of up to USD160 million is available
prior to confirming its individual commitment to the funding package.
Accordingly, whilst negotiations are ongoing, there is uncertainty as to
whether SPMP will be able to achieve the financing it requires on a timely
basis and, if it is able to secure such financing, the terms on which it would
be made available. As a result, the long term future of SPMP will remain
uncertain until any such financing is secured.
Negotiations between the shareholders of SPMP continue as to how to provide
short term financing to SPMP in order for it to continue its operations. No
agreement has yet been reached. However, the various outcomes might include
the dilution of Tri-Star's share-holding in SPMP (as a result of the financial
contributions of other shareholders) and the temporary suspension of operations
at SPMP.
Tri-Star will update the market as negotiations progress.
SPMP's bank loans
SPMP is currently in technical default of its current banking facility
arrangements with Bank Nizwa SAOG and Alizz Islamic Bank SAOG as the most
recent repayment obligation has not, as yet, been met. The short term funding
arrangements referred to above are intended to remedy this default.
As part of the current SPMP facility arrangements, on 15 March 2018 each
shareholder in SPMP entered into a conditional completion guarantee (the
"Guarantee") in favour of Bank Nizwa SAOG and Alizz Islamic Bank SAOG.
Tri-Star's obligation under the Guarantee amounts to 40% of SPMP's liabilities
outstanding to these two banks, which currently stands at approximately USD30
million (out of a total owed of approximately USD75 million). Tri-Star's
obligations under the Guarantee fall away once commercial production of SPMP's
facility in Oman has been achieved. The board of Tri-Star believes this now to
be the position as it has been informed by SPMP that commercial grade antimony
has been produced (as announced on 18 November 2019) and commercial grade gold
dore has been produced and sold. The Guarantee will be formally discharged
once an independent consultant certifies to the banks that commercial
production has been successfully started.
Certain information contained in this announcement would have been deemed
inside information for the purposes of Article 7 of Regulation (EU) No. 596/
2014 until the release of this announcement.
**ENDS**
For further information, please visit www.tri-starresources.com or contact:
Tri-Star Resources plc c/o SBP
David Facey, CEO/ CFO Tel: +44 (0)20 7236 1177
St Brides Partners (Financial PR)
Isabel de Salis / Beth Melluish Tel: +44 (0)20 7236 1177
SP Angel Corporate Finance (Nominated
Adviser) Tel: +44 (0)20 3470 0470
Robert Wooldridge / Jeff Keating
finnCap Ltd (Broker)
Scott Mathieson / Camille Gochez Tel: +44 (0)20 7220 0500
Notes to Editors:
Tri-Star's principal interest is in an antimony and gold production facility
(the "SPMP Project"). The SPMP Project is based in Sohar, Sultanate of Oman,
and is being developed by Strategic & Precious Metals Processing LLC ("SPMP"),
an Omani company in which Tri-Star has a 40% equity interest.
END
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