Kibo Mining turns Sanderson debt into equity

Tanzania-focused mineral exploration and development company Kibo Mining announced on Thursday that it has re-negotiated terms for the payback of a £1.5m loan facility provided by Sanderson Capital Partners in March.

Under the existing terms of the Facility, the AIM-traded firm was required to pay back the loan in either cash or ordinary shares in Kibo by 31 August.

The board said the facility will now be settled by Sanderson converting the full loan amount of £1.5m into a 2.5% equity interest in Mbeya Development Company.

Mbeya is a wholly-owned subsidiary of Kibo and holds 100% of the Mbeya Coal-to-Power Project.

The terms of the conversion have been calculated based on a discounted current value for the project of $100m, Kibo’s board explained.

Kibo will also issue to Sanderson £0.15m in ordinary Kibo shares at the prevailing share price on AIM on the conversion date, as a loan conversion fee.

The board said the conversion will happen no later than 14 September, with the two companies signing a mutually agreed shareholders' agreement between Kibo, Sanderson and Mbeya vesting Sanderson's 2.5% equity interest in the project company.

Sanderson has additionally agreed to grant Kibo access to a new £0.6m standby loan facility until 28 February, on similar terms as those of the existing facility, to be utilised at Kibo's discretion and on which no fees or costs will be payable until Kibo makes use of the facility.

“We are very pleased with the renegotiated settlement terms for the Sanderson loan facility,” said Kibo Mining CEO Louis Coetzee.

“This will relieve pressure on our working capital position and significantly enhance our ability to expedite the remaining MCPP development work.

“It also avoids further dilution in Kibo's equity as a consequence of costs incurred in the development of the MCPP,” he explained.

Coetzee said the renegotiated settlement terms for the facility also set the first independent baseline for the current value of the MCPP and mark the first direct equity investment in the project.

“With the conversion of the facility into equity of the MCPP project company, Kibo also welcomes its first independent equity investor in the MCPP,” he said.

“We believe that this is a significant milestone in the development of the MCPP and demonstrates Sanderson's belief in the long term investment potential of the MCPP and the company.”