AFRITIN is negotiating details of a $48.3m funding package that will enable it to add battery minerals lithium and tantalum to its Namibia-based tin operations which it will also expand.
However, shares in the London-listed firm took a knock, falling just over 7% as of mid-morning. The stock is about 5% down in the last week and just over 15% weaker over the last 12 months. Earlier this month, shares in the company rivalled a previous one-year low of 4.6 pence a share hitting 4.65p/share on September 5.
Afritin said today the proposed funding package would consist of debt and an equity portion as well as an agreement to pay a royalty stream on metal produced from Uis, located in Namibia’s Erongo Region, 330km from the capital Windhoek.
Uis was previously mined by Iscor, the South African steel producer before a slide in tin prices forced its closure. Under Afritin, the mine has been reopened with a view to growing production to 10 million tons a year run-of-mine tin, lithium and tantalum in a second stage expansion. Afritin has targeted 1,200 tons a year in short-term tin production.
If concluded, the funding package would “significantly accelerate” production as well as regional drilling and a feasibility study for the phase two expansion, said Anthony Viljoen, CEO of Afritin today.
If developed, the second stage expansion would see mining at Uis continue for about 14 years.
“We consider this a significant milestone on our journey to becoming a major supplier for the tech metals market and we believe it provides a strong endorsement of our operational achievement to date and our mineral opportunity,” he said.
The funding package consists of a $5.8m debt facility with Development Bank of Namibia. There are also plans for a $17.5m fund-raising with existing and new institutional investors through an accelerated book-build.
Afritin is also exploring an investment with Orion Resource Partners, a UK fund in terms of which it will enter into a royalty agreement as well as a convertible note and equity subscription raising a total of $25m.
Including cash of about $2.2m that would take available cash in Afritin to about $50m.
Commenting on its 12 month financial performance ended February, in which it produced a maiden profit, the group said it would ride out volatile market conditions.
“Despite volatile global commodity markets this year, management and the board of directors remain confident that the market fundamentals for tin production will remain positive”, said Viljoen.