Talked with Axmin IR Judy Webster today. I asked her how the financing was going. There was a PR that reported 4 new banks joining a financing syndicate that will be led by the South African Bank. The total debt is around 185million out of about 300million needed to construct the mine according to the BFS. Webster said the company uses 300million because it's a round number but thinks it will be less than that. They have already gotten bids back on major components of the mine/mill and feel it will come in under the high end estimate of 300million.
So she said they are done looking for debt and will now focus on the equity portion. She said there are several conditions necessary to be fulfilled before the lenders will actually offer them a formal term sheet. The South African Bank will be the lead and the other banks will accept their DD but will obviously review for their internal approvals. One of the new banks will be the lead on the environmental review. Once they get a formal term sheet, they can negotiate with equity partners. The lenders will not advance any funds until an equity partner is found or the equity has been raised another way.
I also asked about the iron ore project that Axmin is pursuing. She said Axmin had this project but several years ago the government was anxious to see that iron ore project become a mine. Iron ore projects are typically big and the government wanted the investment as well as the jobs that it would bring. So the project was turned over to other explorers. Axmin still doesn't have it back for sure but they at least have a chance to get it back. The company believes the iron ore project could be a company maker.
I asked if the company would consider selling off a majority of Passadero so that they would have funds to continue exploration of the mineral belt. She said that outside of a complete purchase of the company, she doesn't anticipate that they would take a minority position in the mine. She thinks they will JV a minority position of say 25% to a partner.
In terms of timing, she is hoping the lenders finish their DD and offer a complete term sheet by mid year. In anticipation of that event, Axmin is talking to a number of potential equity partners. Once the debt is in place, they can negotiate an equity partner that can help them raise the additional 100-120million they need and make a formal decision to build the mine.
So they would be pleased if all this is finalized and construction starts by early Q3. She said this financing stage usually takes about 6 months in mining friendly jurisdictions but it will likely take 2 yrs with CAF.
Overall I am still very interested in Axmin at .08. I think the potential is around .40 to .50 even after 100% dilution from raising the equity.
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