Discovery Metals reduces debt by P520m
Staff Writer | Tuesday May 20, 2014 15:08
The Botswana-focused copper and silver miner reported it had signed a term sheet with its lenders to reprofile its debt, reducing the gross interest bearing debt from $159-million to $100-million.
The lenders have also waived all continuing defaults under the project finance facility and the revolving credit facility and agreed to a 12-month standstill on principal and interest payments. “The debt reprofile with the company’s lenders brings certainty to DML. With the significant reduction in overall debt and effective 12-month standstill in place, DML can now focus exclusively on its operating strategy to transition the Boseto project to underground mining and, in doing so, supply the processing plant with consistent higher grade, higher recovery sulphide copper ore and start the Zeta underground mine,” said DML chairperson Jeremy Read.
The debt reprofiling comes after a $105-million recapitalisation deal with Montesant Partners collapsed earlier in May. Under the debt reprofile, the revolving credit facility would cease to exist and the project finance facility would be amended and restated to reflect the terms and conditions of the new term sheet. The new balance would have a term loan of nine years, with interest to be capitalised for the first four years of the term.
Scheduled principal repayments would be made starting five years from the loan, and interest rates would be set at London Interbank Offered Rates plus 5 percent.
DML would start the necessary procedures to undertake a 15% placement and subsequent capital raising before the end of the year, with the funds raised going towards the start of underground development at Boseto, to support working capital requirements. DML shares were trading at a high of 4c a share on Monday, but trading slightly lower at 3.5c a share late in the afternoon. Before resuming trading on Monday, the company’s last day of trading was May 12, when the stock closed at 2.8c a share. However on the Botswana Stock Exchange(BSE), where the company has a secondary listing, the counter traded unchanged yesterday at 30 thebe per share.