Ormonde joint venture Saloro enters into new EUR 10m loan facility

Ormonde Mining reported on Thursday that Saloro, the operator of the Barruecopardo Tungsten Mine in Spain in which Ormonde holds a 30% joint venture interest, has entered into a €10m, 12 month term loan facility to be provided by funds managed by Oaktree Capital Management.

The AIM-traded firm had announced on 20 September that the new term loan would provide Saloro with additional liquidity support as it established mining operations on the main ore body at Barruecopardo.

Saloro would be able to draw from the loan on an as-required basis, in tranches of at least €0.5m, over the loan period.

Interest on the loan would be capitalised in full, at a rate of 18% per annum on drawn funds, with a 3% per annum commitment fee accruing on undrawn amounts.

Drawn funds, capitalised interest and commitment fees would be repayable at the end of the 12 month term, by bullet repayment.

“Under the new term loan, Saloro has the option to substitute drawings under the funding line with letters of credit procured by Oaktree, to support Saloro in obtaining loan funding from third party banks, rather than borrowing directly from Oaktree under the new term loan,” the Ormonde board explained in its statement.

“Discussions are advancing with a number of third party banks in relation to this lower cost funding route.”

It was also agreed that interest on the original loan in place with Oaktree since 2015 would be accrued in full, at a rate of 15%, over the new term loan's 12 month term.

“This will revert to 7% cash interest and 5% payment in kind interest at the end of this period, should certain financial covenant tests be achieved, or 7% cash interest and 7% payment in kind interest if tests are not achieved.”