Jim's comments on the loan guarantee:
The short answer to your question is that a binding commitment for a loan guarantee from the German Government’s UFK program can be secured prior to execution of the overall financing package. That binding commitment is publicly disclosed at the time. The actual loan guarantee from the German Government is formally issued as part of the full debt package/solution for a project, given that (in our case) such a guarantee would be for a portion of our expected debt financing, and such debt financing is expected to be an integral element of the overall CAPEX raise. But the binding commitment of the UFK program for a loan guarantee is a very significant catalyst to completing the assembly of a project’s CAPEX solution.
By way of background, the team at Northcott Capital, which is helping to shepherd us through this program and the larger debt financing effort, has been through this process many times before on behalf of natural resource development projects such as ours. Assembling such debt packages can be a highly complex process that involves many players, multiple optionalities, and considerable time to navigate. Here is how the process general works in practice:
The first step is to obtain “in-principle eligibility.” We secured this following execution of our commercially binding offtake agreement with ThyssenKrupp. The guarantee amount is tied to the value of the FeNb to be sold into Germany. At present, a loan guarantee from the UFK program for our project is estimated to be in the US$120 million – US$130 million range. This initial determination from the German Government has been an important driver of our debt financing effort to date.
As you may know, the German Government funds this program because its manufacturing-based economy is highly dependent upon imports of raw materials such as FeNb. As such, it sees value in committing German taxpayer funds to help its manufacturing base secure such imported raw materials. Additionally, both the German government, and manufacturers such as ThyssenKrupp, see value in diversifying their upstream raw material supply chains as much as possible. That helps to de-risk their operations. Given the relatively limited supply diversity of FeNb today, an additional source – particularly from the U.S. – is welcomed by these manufacturers.
Our in-principle eligibility was re-confirmed recently after the UFK program received our Elk Creek Feasibility Study.
The next step is “Preliminary Approval” from the UFK program. That is a major step in the process, as Preliminary Approval is binding upon the German Government to provide the guarantee. This requires the appointment of a bank as the UFK agent and is undertaken in parallel with banking credit approvals. Typically, the Preliminary Approval will be received once the UFK Banks get their credit approvals. The grant of Preliminary Approval for a project is publicly disclosed.
Following Preliminary Approval, our team then works with a lender, and in our case in conjunction with consortium of lenders, on the terms of the financing to be guaranteed by the UFK program.
The actual guarantee from the UFK program is issued as a final part of a full debt package/solution for the project.
