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MZI Resources secures US$3M from Resource Capital Fund

Published: 06:30 26 Aug 2014 EDT

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Minerals sands-focussed MZI Resources (ASX: MZI) has secured an additional US$3 million in short-term loan facilities from largest shareholder the Resource Capital Fund VI L.P. (RCF).

RCF has also agreed to extend the repayment date of the Facility to 30 September 2014.

The support from RCF to extend the facility from US$4.5 million to US$7.5 million is a significant vote of confidence in the company.

The increase will ensure that MZI has sufficient funds to continue the engineering, L88 offtake negotiation and finalise funding documentation for its flagship Keysbrook mineral sands project near Perth, Western Australia.

The Keysbrook Project is located 70 kilometres south of Perth. The project is characterised by its high leucoxene content, and once in operation, will be one of the world’s largest producers of the premium Leucoxene 88 product.

It will produce an average 91,000 tonnes per annum of mineral sands products from 110,000 tonnes of dry heavy mineral concentrate.

This will be trucked about 120 kilometres to Doral’s mineral separation plant, which is just 10 kilometres from the Bunbury Port, for toll treatment.

Offtake agreements are already in place for 50% of the forecast annual revenue from Keysbrook and approximately 60% of forecast annual production.


Addtional facility details

There are no changes to the interest rate and the security provided under the Facility.

Approval under the Foreign Acquisition and Takeovers Act (FATA) will be required to increase RCF’s shareholding in MZI from 17.1% to 19.9% through the issue of shares to pay the Extension and Increase Fee and to partially repay the Facility.

MZI plans to repay the balance of the Facility by using proceeds from the draw-down of funds from the previously announced and shareholder approved US$42.5 million Keysbrook funding package provided by RCF.


RCF is the largest shareholder


RCF is MZI’s largest shareholder with a current interest of 17.1% on a shares on issue basis.

If the Foreign Investment and Review Board does not object to the issue of shares to pay the Extension and Increase Fee and partially repay the Facility, RCF’s shareholding in MZI will increase to approximately 19.9%.

MZI has been granted a waiver of listing rule 10.1 by ASX Limited for the increase in the Facility. The waiver permits the granting of security over the Company’s assets in favour of RCF pursuant to the Facility agreement without obtaining shareholder approval.

The terms of the new waiver, which replaces the waiver granted by the ASX dated 9 April 2014, are set out in the attachment to this announcement.


Key terms of the variation to the facility


Variation: Increase the Facility by US$3.0m and extension of the Facility repayment date to 30 September 2014.

Comment: Extension and Increase Fee of US$105,000 payable either in cash or MZI shares.

Variation: Increase the Facility by US$3.0m.

Comment: Facility increased to US$7.5m (US$1m has been repaid by the issue of MZI shares following approval by shareholders at the 27 June 2014 General Meeting.)

Variation: Payment of the Extension and Increase Fee and partial repayment of the Facility. Increase in RCF shareholding to 19.9%.

Comment: By the issue of 98,660,656 shares at 0.7 cents (The issue of shares in lieu of cash to partially repay the Facility is conditional on approval to increase RCF’s shareholding to 19.9% under the Foreign Acquisition and Takeovers Act (FATA)).

 

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