TIDMWLFE
RNS Number : 2607N
Wolf Minerals Limited
24 October 2016
24 October 2016
Wolf Minerals Limited
Senior Debt Restructure and GBP20m Bridge Facility with Resource
Capital Funds
Specialty metals producer, Wolf Minerals Limited (ASX: WLF, AIM:
WLFE) (Wolf or the Company) is pleased to announce that it has
entered into a series of agreements to support the Company's
financial strength and operations as it works towards commercial
production and design performance at the Drakelands open pit mine
(Drakelands).
Highlights
-- Standstill period established with limited events of default.
-- Senior Debt principal repayments deferred until January 2018
and tenor conditionally extended until June 2023.
-- GBP20 million bridge loan facility with Resource Capital Fund VI L.P.
-- Funds to be used to support operations of the Drakelands mine
as Wolf works towards commercial production and design
performance.
To continue its focus on improving the performance of the
processing plant and optimising ore feed at Drakelands, Wolf has
executed binding agreements with:
-- Its existing senior lenders (Senior Lenders) for a standstill
and restructure of the senior debt currently outstanding (Debt
Restructure); and
-- Resource Capital Fund VI L.P. (RCF VI), to provide a GBP20
million, twelve month secured bridge loan facility (the Bridge
Facility) with the potential for this to be increased to GBP30
million.
Since commencement of operations in late 2015, the production of
tungsten concentrate at Drakelands has been adversely affected by
the underperformance of the processing plant and the finer nature
of the ore than originally expected. In addition to these
challenges the tungsten price has remained lower than anticipated
despite a constrained supply of tungsten concentrate globally.
In the processing plant a work program involving equipment
changes and design modifications is underway and gradual
improvements in production are expected during implementation of
the program over the coming quarters.
In the open pit the ore mined over the next 12 months is
anticipated to gradually transition and become increasingly coarse
and as such there should be a consequential improvement in
recoveries in the processing plant.
Wolf Managing Director, Russell Clark, commented:
"The executed agreements enable Wolf to continue its focus on
improving operations at the Drakelands mine to enable the project
to reach its true potential. We are starting to see improvements in
production following the commencement of the work program in the
processing plant and remain confident that Wolf, with its large
production capacity and location in a first world country, is well
positioned within the global tungsten market."
"The Company values the continued support from its lenders,
major shareholder RCF VI and its affiliates; and major customers.
The combination of the standstill, restructure, new funding support
from RCF VI, and support from our customers enables the Company to
focus on the success of Drakelands."
Bridge Facility
The terms of the Bridge Facility provide that RCF VI, a major
shareholder and an associate of Wolf's other major shareholders
Resource Capital Fund V L.P. and RCF V Annex Fund L.P., will
provide GBP20 million, with the potential for this to be increased
to GBP30 million (increase available at the sole discretion of RCF
VI) for a maximum of 12 months from first drawdown. The Company
anticipates making an initial drawdown request under the Bridge
Facility for GBP6.5 million following the completion of certain
administrative conditions precedent in late October 2016.
During its term, the Bridge Facility will be fully secured and
rank pari passu with the Senior Lenders on substantially the same
form and terms as existing under the Senior Debt. Interest may be
paid in cash or capitalised each quarter at Wolf's discretion.
The Company may pre-pay the Bridge Facility in certain limited
circumstances, but if not prepaid at the conclusion of the 12 month
term, the Bridge Facility will mandatorily switch to a three year
subordinated convertible loan, if certain conditions precedent are
satisfied, or a three year subordinated loan if those conditions
are not satisfied.
As soon as reasonably practicable, the Company will seek
shareholder approval at an Extraordinary General Meeting to enable
the issue of ordinary shares in accordance with the convertible
loan terms under the Bridge Facility. The convertible loan is also
conditional upon, amongst other things, RCF VI obtaining FIRB
approval.
Under the Bridge Facility the Company has also given RCF VI
certain warranties and indemnities and RCF VI has certain limited
rights of termination.
Terms of the three-year convertible loan
The convertible loan interest rate of 10% p.a. is payable
quarterly in arrears in either cash or shares at the Company's
choice, issued at the prevailing 20 day volume weighted average
price per Wolf share. RCF VI may convert the loan in whole or in
part at any time at a conversion price based on the 20 day volume
weighted average price prior to date of the Bridge Facility
maturity, subject to a minimum of A$0.13 and a maximum of
A$0.20.
Terms of the three-year subordinated loan
The subordinated loan interest rate of 15% p.a. is payable
quarterly in arrears in either cash or shares at the Company's
choice, (assuming the required shareholder consents are obtained to
issue sufficient new shares) issued at the prevailing 20 day volume
weighted price per Wolf share.
Debt Restructure
The Company currently has GBP64 million outstanding under its
debt facilities with the Senior Lenders (Senior Debt).
The Senior Lenders and RCF VI have agreed a standstill of the
Senior Debt conditions until the earlier of a decision by the Devon
County Council to extend the Drakelands planning permission for an
expiry date beyond 2021 (decision expected before end-2016) or 31
January 2018. The standstill provides that a limited number of
events of default shall apply under the Senior Debt and Bridge
Facility, along with certain waivers of, and amendments to, the
Senior Debt conditions for any non-compliance and grants relief
from financial and other covenants.
The terms of the Debt Restructure provide that all Senior Debt
principal repayments are deferred until January 2018 and the tenor
of the Senior Debt is extended until June 2023, conditional upon a
decision to extend Drakelands planning permission beyond 2021.
A portion of the Company's Senior Debt is supported by
guarantees provided by the German government's Untied Loan
Guarantee Scheme (Ungebundene Finanzkreditdeckung - UFK), and
Wolf's tungsten concentrate customers; Wolfram Bergbau und Hütten
AG and Global Tungsten & Powders Corp (together
Guarantors).
The Guarantors have consented to the Debt Restructure, and the
term of the Guarantees and the term of the Company's supply
agreements with Global Tungsten & Powders Corp and Wolfram
Bergbau und Hütten AG are consequentially extended to align with
the revised tenor of the Senior Debt.
Related Party Transaction
RCF VI is deemed to be a Related Party as defined in the AIM
Rules as it is considered to be an associate of RCF V and Annex
Fund. RCF V, Annex Fund and RCF VI currently hold 609,863,714
shares, which equates to a relevant interest of approximately
56.3%. As a result, entering into the Bridge Facility is deemed to
be a related party transaction under the AIM Rules.
The Company's board of directors (excluding Chris Corbett, who
is a representative of RCF V) consider, having consulted with the
Company's nominated adviser, that the terms of the related party
transaction are fair and reasonable insofar as its shareholders are
concerned.
ENDS
Wolf Minerals Limited
Russell Clark +61 8 6364 3776
Numis Securities
John Prior/James Black/Paul Gillam +44(0)20 7260 1000
Newgate
Adam Lloyd / Ed Treadwell / Helena
Bogle +44 (0) 20 7653 9850
About Wolf Minerals
Wolf Minerals is a dual listed ("ASX: WLF", "AIM: WLFE")
specialty metals company. With global demand for tungsten rising
and future global production expected to be constrained, Wolf
Minerals has recently completed the development of a large tungsten
resource at its Drakelands Mine, located at Hemerdon, in southwest
England.
This information is provided by RNS
The company news service from the London Stock Exchange
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