BCI Minerals Ltd has announced that the NAIF Board has made an investment decision to approve a loan facility for the Mardie salt and potash project, subject to certain conditions.
The NAIF loan facility is for a total of A$450 million to be used for construction and ramp-up of the Mardie project and associated financing fees and costs. The facility will have an overall tenor of 15 years from financial close.
Mardie Minerals Pty Ltd, a wholly-owned subsidiary of BCI and owner of the Mardie project, will be the borrower. The loan will be senior secured on a pari passu basis with the commercial bank and any other senior secured debt tranches.
The NAIF loan approval is subject to BCI demonstrating meaningful progress with the Mardie project by 31 March 2021 (or such later date agreed with NAIF), facility documents being entered into between the parties and satisfaction of conditions to funding, including:
- Conclusion of the Federal Minister’s consideration period as outlined in the NAIF Act 2016.
- Finalisation of the State Government’s consideration of the project and its agreement for the approved funds to be advanced.
- Completing other debt and equity funding arrangements.
- Securing the tenure, approvals, permits and agreements required to construct and operate the project.
- Entering into binding offtake contracts for early production years before first loan draw down.
- Other customary conditions precedent to financial close and draw down.
Subject to the final Mardie project financing structure, it is anticipated that initial development funding will be sourced from equity, and the NAIF loan will be drawn in the second half of 2022.
NAIF’s decision follows extensive discussions between the parties over a period of approximately 18 months, including detailed due diligence by a group of NAIF endorsed independent experts (including technical, approvals, financial and market) following completion of Mardie’s definitive feasibility study in July 2020.
The Mardie project, located in the Pilbara region of Western Australia, involves construction of large ponds and crystallisers over a 100 km2 area, two process plants and a new port facility for export of salt, sulfate of potash (SOP) and other products. Mardie aims to export 4.4 million tpy of high-purity salt and 120 000 tpy of SOP via solar evaporation of an inexhaustible seawater resource and a production process driven mainly by natural solar and wind energy.
Mardie will be a globally significant Tier 1 salt and SOP project that is forecast to generate robust cash flows over an operating life of at least 60 years. An independent economic analysis prepared for the NAIF assessment process has forecast significant benefits to the northern Australian region over Mardie’s construction and operating life. Mardie will have a peak construction workforce of approximately 500 people and a permanent operating workforce of approximately 200 people, and will also create additional indirect employment in the Pilbara region. BCI will also seek to maximise local and indigenous employment and contracting opportunities.
BCI’s Managing Director Alwyn Vorster said: “We are pleased to receive conditional NAIF Board approval for an A$450 million long tenor loan. This loan will be the largest NAIF allocation to a Western Australia based company to date and recognises the potential long-term benefits which Mardie will bring to the region, including new port infrastructure available to third party users. Importantly, the loan will also provide significant momentum for BCI to secure the remaining debt and equity funding components required for Mardie’s development. We acknowledge the strong support from various Federal and Western Australian State Government ministers and departments.”
NAIF’s Chief Executive Officer Chris Wade said: “We are delighted to be able to support the development of the Mardie salt and potash Project which, by supplying agricultural and chemical industries across Asia, offers exciting export opportunities. Locally, the project will also bring significant economic benefits to the Karratha, Dampier and Onslow areas.”
The parties will now work towards completing facility documentation and satisfying the conditions to funding.
Read the article online at: https://www.worldfertilizer.com/potash/18122020/a450-million-loan-approved-for-mardie-salt-and-potash-project/