Alphamin Resources Announces US$80 Million Credit Facility for Bisie Tin Mine Construction

• Financing
• Democratic Republic of Congo

GRAND BAIE, Mauritius, Nov. 13, 2017 (GLOBE NEWSWIRE) -- Alphamin Resources Corp. (TSX-V:AFM) (“Alphamin” or “the Company”) has secured a credit facility of US$80 million from a syndicate of lenders for the construction of the Bisie Tin Mine (“the ABM project”) in the North Kivu Province of the Democratic Republic of the Congo. The ABM project, which is likely to become one of the most significant tin mines in the world, is expected to begin production in early 2019 with steady state production expected towards the end of the same year.

• Project debt funding now secured with credit agreement signed with a syndicate of lenders for an US$80 million credit facility
• Commitments received for 55 percent of the remaining total equity funding required to complete construction and final equity raise has commenced and targeted for completion this quarter
• Construction of the ABM project progressing well with the box cut for the underground portal now complete and the decline 50m underground and advancing into hard rock
• Project commissioning scheduled to commence early in 2019 and achieve steady state production before the end of 2019

A definitive credit agreement has been signed by Alphamin with Sprott Private Resource Lending (Collector), LP (“Sprott”), Barak Fund SPC Limited (“Barak”) and Tremont Master Holdings (“Tremont”) (collectively, the “lenders”) in respect of an US$80 million senior secured, non-revolving, term credit facility (the “credit facility”) to be provided to Alphamin’s 80.75 percent subsidiary, Alphamin Bisie Mining S.A. (“ABM”), as borrower, for the continued development of the ABM project.

“We are very pleased that Sprott and Barak have committed to partner with our existing major shareholder, Tremont, to provide the debt financing needed for the ABM project, as a step in drawing the fund-raising process towards a close and delivering on our commitment to stakeholders to bring the ABM project into production,” said Boris Kamstra, CEO of Alphamin. “The ABM project is advancing and our team has made excellent progress in the construction of the mine and associated infrastructure. The completion of the box cut for the underground portal of the mine is another key risk mitigating milestone for the project. We’ve also received commitments for the majority of the remaining equity funding requirement, so we are excited to move this forward with everyone involved.”

To date, Alphamin has secured in excess of 80 percent of the remaining financing needed for the ABM project, which includes this US$80 million credit facility, US$13.7 million commitment from the Industrial Development Corporation of South Africa Ltd (“IDC”), and US$24.7 million commitment from Tremont. As a result, Alphamin will now focus on raising the final US$31.4 million of equity to complete the ABM project.

Credit Facility Terms

The credit facility provides for an initial advance of US$10 million, which is available upon fulfilment of initial conditions precedent pertaining to inter alia delivery and execution of security and statutory documents, which conditions are expected to be fulfilled shortly after signing. The balance of US$70 million will become available following the satisfaction of certain subsequent conditions precedent, including, inter alia, the Company completing an equity financing of a minimum of US$50 million net of associated costs (“equity financing”) (of which US$24.7 has been committed by Tremont as its participation pro-rata to current ownership).

The key terms of the credit facility are:

• US$80 million senior secured, non-revolving term credit facility
• Available, subject to fulfilment of conditions precedent, for an 18-month period following the initial advance date
• Five-year term commencing on the initial advance date
• Coupon of 14 percent plus the greater of US dollar 3-month LIBOR and 1 percent per annum
• Interest to be capitalized until the earlier of achievement of commercial production and 24 months following the initial advance date, repayable monthly thereafter
• No principal repayments until 31 March 2020, with repayments thereafter in 11 equal quarterly instalments
• Cash sweep of 30 percent of excess cash flow with effect from 30 April 2020
• Work fee of 2.9 percent payable as to 50 percent upon the initial advance and the balance upon the first subsequent advance
• Bonus shares of US$1.77 million to be issued upon the later of the initial advance and completion of the equity financing and US$2.23 million to be issued pro rata on subsequent advances
• Termination payment in certain circumstances, not to exceed value of work fee and bonus shares not previously paid

The credit facility is subject to the final acceptance of the TSX Venture Exchange and credit documentation will not be effective unless and until such acceptance has been obtained. All shares of the Company issued to the lenders in connection with the credit facility will be subject to a 4-month hold period in accordance with applicable Canadian securities laws.

All advances under the credit facility are subject to the satisfaction of a number of conditions precedent and there can be no assurance that the Company will satisfy these conditions.

A full copy of the credit agreement will be filed and available for viewing and download on SEDAR (www.sedar.com).

The ABM Project

“Alphamin is focused on unlocking one of the richest tin deposits in the world and, as a result, the entire North Kivu region of the DRC. This is a very rare opportunity where you have both the potential for an extraordinary financial return in a particular project and a host of developmental returns in the surrounding region and in the country in particular,” says Kamstra.

Future tin supply is globally uncertain as tin inventories are running low and economically viable tin reserves are being depleted. The International Tin Research Institute (“ITRI”) has forecast that there is likely to be a global shortfall of tin commencing in 2018.

“We believe that we have a world-class tin deposit that is managed by an experienced team and is supported by well capitalised investors who are astute industry specialists,” continues Kamstra, “and the ABM project provides the ideal foundation to build a premier tin producer.”

Alphamin is expected to deliver a significant return to investors through the full range of expected tin prices. Under the Control Budget Estimate (“CBE”) completed in February 2017, the net present value (“NPV”) of the ABM project amounts to US$402.2 million and the real, after tax internal rate of return (“IRR”) is 49.1 percent. The CBE is based on a long term, real tin price of US$21 400 per tonne, whilst ITRI is predicting a long run equilibrium price of US$ 25,000 per tonne.

Project Construction Update

Considerable progress on the construction of the ABM project has already been made to-date. The box cut for the underground portal of the mine has been completed and the decline has already progressed 50m underground into hard rock. The first production at the mine is expected early in 2019 and the mine is expected to reach steady state production towards the end of 2019.

Additional project construction milestones achieved to-date include opening the access road between the Walikale – Kisangani road and Bisie which has enabled trucks to make regular deliveries of material and equipment to Bisie using this road as well as the construction and inauguration of the Lukaa school near Logu.

Positive Impact for Region

The ABM project is the manifestation of what conflict mineral legislation aimed to achieve. Responsible procurement is the order of the day and the normal way of working at the ABM project. Currently, the ABM project is the largest local employer in the region and is continuing to add value to the area through job creation, construction, connectivity and development of economic infrastructure.  The ABM project has been a catalyst for regional economic growth and holds more positive promise for years to come, and Alphamin is committed to contributing to the stability and economic activity in North Kivu.

Overall Financing Update

The ABM project has a peak funding requirement of US$172.1 million, including a total contingency of US$23m (US$8m previously). To date, US$140.7 million has been raised and committed, covering in excess of 80 percent of the total peak funding requirement.

Equity Financing

Following on from the equity fundraising of US$22.3 million completed in July 2017, the commitment from the IDC to invest US$13.7 million in the ABM project as equity pro-rata to its shareholding, and the successful conclusion of the aforementioned US$80 million credit facility, Alphamin is now commencing the raising of the final equity required to complete the ABM project. Alphamin intends to raise up to US$56.1 million in the planned equity financing, with Tremont committing to participate in the amount of US$24.7 million. This final equity raise is in progress, and is expected to close before year-end. Pricing and other offering terms will be announced by subsequent press release as soon as determined. The equity financing is subject to regulatory approval.

Bridge Loan

To enable the ABM project to continue on its critical path development timeline without interruption, Alphamin has secured a US$5.7 million bridge loan from Tremont. This again signifies the confidence in the project’s future from one of its key stakeholders. The bridge loan is unsecured and repayable from the proceeds of the next equity financing by ABM no later than 31 January 2018. The bridge loan bears interest at a rate of 1% per month capitalized monthly and payable upon repayment of the loan. A 2.9 percent drawdown fee is also payable in connection with the bridge loan, subject to all necessary regulatory approvals.   

Related Party Transactions

Tremont owns 44.1 percent of the outstanding common shares of Alphamin. As a result of the participation in the credit facility, and the bridge loan provided by Tremont, the credit facility and bridge loan are both considered to be “related party transactions” under TSX Venture Exchange Policy 5.9 Protection of Minority Security Holders In Special Transactions (“Policy 5.9”).

The transactions are however, both exempt from the formal valuation and minority approval requirements of Policy 5.9 as neither the fair market value of the subject matter of, nor the consideration for each transaction, insofar as they involve Tremont, exceeded 25 percent of Alphamin’s market capitalization at the relevant time. The participation of Tremont as a lender in the credit facility and the making of the bridge loan were not finalized until shortly prior to the execution of the credit facility. Alphamin wished to secure the bridge loan and credit facility as soon as possible and therefore could not publicly disclose details of the nature and extent of Tremont’s participation in the credit facility and bridge loan at least 21 days in advance.

Qualified Person

Gordon Mark Cresswell, (PrEng MSc, FSAIMM, MIMMM, ARSM), a Minerals Processing Consulting Engineer of DRA Projects, an independent EPCM consulting company to Alphamin, and a Qualified Person as defined in National Instrument 43-101 Standards of Disclosure of Mineral Projects has reviewed and approved the scientific and technical information contained in this news release.