Australia-listed Globe Metals and Mining has reported that capital funding requirements for Phase 1 project development at its Kanyika Niobium project, in Malawi, have been finalised at an estimated  $46-million, inclusive of a 25% project contingency allocation.

The company says the Phase 1 project development plan is confirmed with a clear path to project construction.

Moreover, the company says a funding strategy has been formulated to best support the project and minimise shareholder dilution, consisting of equity-related funding, including strategic equity funders contributing about $8-million; project debt amounting to about $15-million; convertible instruments totalling about $9-million; and offtake pre-financing of about $14-million.

“The company has made significant progress in formulating the funding strategy of Phase 1, emphasising practicality, viability and risk mitigation within the funding package. This package is expected to consist of equity, project debt, convertible notes, and pre-shipment financing,” says Globe.

The company notes that equity funding could involve a general issue of shares to the market, along with allocations to cornerstone investors. It says discussions with the cornerstone investors are well-advanced but remain ongoing.

“The company is committed to minimising the dilution of existing shareholders as much as possible and believes the Phase 1 financing package will address this concern,” says Globe.

The company explains that progress on project debt and convertible note funding is also advanced, with negotiations in progress, whereby it says it has received substantial support from global and regional development institutions, which will play a crucial role in providing the necessary debt and convertible note funding for the project.

Strategically, the company says it has decided to focus on Western principal – original-equipment manufacturer – refined products offtake and has finalised a “target list” of strategic offtakers. Discussions regarding the long-term offtake of its main high-purity products – niobium, tantalum and zirconium – are progressing well.

The company announced the completion of its optimisation study on February 5.

The key aspects of the optimisation study are a pre-tax net present value – 8% – of $1.004-billion and internal rate of return of 47.08%; the total unit cost of niobium pentoxide reduces by 15% to $18.90/kg and gross profit margin increases by 5% to 71%; a 27-year life-of-mine; and a two-phase development approach which allows a significant reduction in initial upfront capital from $70-million to $46-million and greatly reduces the risk profile of the project.

Key aspects also include a change in refining technology to the chlorination process, which is more environmentally sustainable, cost-effective, and produces high-purity products that can command premium prices, and the preferred location of the refinery in Malawi.

PROJECT EXECUTION PHASE

Globe says Phase 1 development of the Kanyika project is progressing mostly on schedule, despite minor delays caused by the relocation of the refinery to Malawi.

The company says these delays are owing to the work required for the environmental- and social-impact assessment (ESIA) and the incentives associated with the export development zone, which are expected to be finalised shortly.

As announced on March 20, the company says it has made significant advancements in the metallurgical testwork for its Chlorination Refinery, successfully completing laboratory tests and metals extraction tests.

Globe is now commissioning its laboratory-scale Chlorination Refinery, with an announcement expected soon. The pilot-scale refinery will produce marketing samples to support ongoing offtake agreement discussions.

Following the pilot refinery phase, the company says it will update its feasibility study to include the construction of the Chlorination Refinery in Malawi. This update will encompass the finalisation of the ESIA and its approval by Malawian authorities.

The company says it anticipates starting the execution of its Phase 1 project by the end of 2024, beginning with the front-end engineering design phase, followed by project construction scheduled for early 2025.

“It is fantastic to see how well our Kanyika project has been received by the government of Malawi, shareholders and funding institutions. Our project has taken a material leap forward in its journey into development and eventually production. I would suggest that the project is being materially derisked from a funding perspective, which paves the way forward for the project in many respects.

“I must thank the government of Malawi and our exceptional board and management team, for bringing the project to this exciting point in its journey into development. We look forward to making some really exciting announcements shortly in terms of our refining pilot plant and of course the finalisation of funding commitments, currently under discussion,” says Globe CEO Paul Smith.