Tiomin Resources (TIO-T) has reached final agreements with a lending syndicate for US$155 million in debt financing for the Kwale titanium-sands project in Kenya, fulfilling conditions on an earlier equity financing.
The debt financings allow the release of $60 million (US$53 million) from a 200-million-unit financing at 30 that Tiomin arranged in June. The units consist of one share plus half a warrant, which is exercisable at 36 until early December of 2007. Those are eligible for conversion to shares and warrants at the close of business on August 3.
The loans consist of US$120 million in senior debt and US$35 million in junior debt, both secured by the assets of the Kwale project. Tiomin’s Kenyan operating subsidiary will start to draw those loans in February, after being financed out of the equity funding to start construction. A third loan covers cost overruns.
The US$120 million loan, advanced by a bank syndicate and equipment financier Caterpillar Financial, bears interest at the London Interbank Offer Rate (LIBOR) plus 3%. The junior loan, advanced by Chinese nickel producer Jinchuan Group, bears interest at LIBOR plus 4%.
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