Join our daily newsletter At The Bell to receive exclusive market insights
- Lithium producer Pilbara Minerals (PLS) has secured a low-cost US$110 million (A$153.34 million) debt facility to replace its existing Nordic Bond
- Funding secured from BNP Paribas and the Clean Energy Finance Corporation (CEFC) is on more favourable terms than the bond
- The new arrangement will ease cashflow pressure on PLS as it tries to navigate soft market conditions during the COVID-19 downturn
- BNP Paribas and the CEFC have been solid supporters of Pilgangoora, having already invested significantly in the project
- Now recognised as a reputable global lithium and tantalum producer, PLS is ready for the next steps even amid tough market conditions
- Pilbara Minerals is trading 7.8 per cent higher today at 37.2 cents
Pilbara Minerals (PLS) has secured a low-cost US$110 million (A$153.34 million) debt facility to replace its existing Nordic Bond.
The new arrangement with international bank BNP Paribas and Australia’s Clean Energy Finance Corporation (CEFC) will be used primarily for the early redemption of the US$100 million (A$139.4 million) bond which had been used for the first phase of development at the Pilgangoora Lithium-Tantalum Project in 2017.
The favourable terms of the new arrangement — including an interest rate of around five per cent instead of the bond’s 12 per cent, and an extended grace period — will ease cashflow pressure on PLS as it tries to navigate soft market conditions during the COVID-19 downturn.
Firm partnership
BNP Paribas and the CEFC have been solid supporters of Pilgangoora, having already invested significantly in the project.
BNP Paribas had already guaranteed a US$15 million (A$20.91 million) working capital facility in 2018. The banker has now also committed to extending the terms of the undrawn facility.
The CEFC has also bolstered the project’s finances with an initial US$15 million investment to help cover the Nordic Bond.
Pilbara Minerals Managing Director and CEO, Ken Brinsden, says the new funding arrangement will enable the company to move forward at Pilgangoora with reduced financial headwinds.
“This landmark refinancing of our long-term debt facilities is an outstanding achievement for Pilbara Minerals, representing the first time that a lithium raw materials player of our size has attracted conventional, syndicated project financing at such a competitive cost,” Ken said.
“We are very pleased with the continued support of both BNP Paribas and the CEFC, which clearly demonstrates their ongoing commitment to a long-term partnership with the company to support our growth ambitions and sustainability objectives,” he added.
Outlook
Both the new finance facility and the extended working capital facility have been approved by the Pilbara Minerals’ board.
The cash will be used to pay off the Nordic Bond, including principal and interest payments, early redemption premiums and transaction costs.
The fact Pilbara Minerals has successfully managed the development and optimisation of the Pilgangoora project has opened the door to competitive funding opportunities. Now recognised as a reputable global lithium and tantalum producer, PLS is ready for the next steps.
Securing the revised and favourable funding arrangements will allow Pilbara to grow and diversify the business more easily even as it faces quite tough market conditions.
Pilbara Minerals is trading 7.8 per cent higher today at 37.2 cents as at 1:15 pm AEST.
