Globe Metals & Mining has executed a non-binding Term Sheet for a USD 10 million convertible loan with The Industrial Development Corporation of South Africa, taking a step closer to securing essential funding for the early development of the Kanyika Niobium Project.
Highlights Globe Metals & Mining has signed a non-binding Term Sheet with The Industrial Development Corporation (IDC), owned by the South African Government, for approximately USD 10 million convertible loan to support the Kanyika Niobium Project (Project). It is proposed that the funds will be used to fund Kanyika's updated bankable feasibility study, detailed front-end engineering and design, and specific early works essential for project advancement. IDC's involvement adds significant credibility to the Project and substantially reduces associated risks of the Project. The Term Sheet allows IDC the conversion of debt for up to a 25% equity interest in the Malawi Project holding company, with a second conversion option for up to a 19.9% equity interest in the listed entity. IDC's funding constitutes 22% of the total USD 46 million funding required for Phase 1 of the Project. Together with the USD 15 million senior debt from Ecobank Malawi announced on 25 July 20241 , this equates to 54% of the required funding for Kanyika's Phase 1 development. Globe Metals & M
Globe Metals & Mining Limited (ASX: GBE) ('Globe' or 'Company') is pleased to announce the execution of a non-binding Term Sheet with The Industrial Development Corporation, a key player in economic development across Africa. IDC will provide a Malawian-registered Globe subsidiary (Project HoldCo) with a secured convertible loan for USD 10 million, available partly in South African rand (ZAR) and partly in USD, to fund the following early development activities of the Project
completion of an updated bankable feasibility study (BFS); completion of the detailed front-end engineering design (FEED) and certain pre-implementation activities for the Project (Early Works)
IDC will have the right to convert the loans (plus accrued interest, costs, and fees) (Loans) into shares in Project HoldCo after completion of the BFS, FEED, and Early Works (First Conversion Option), and thereafter have the right to convert its shares in Project HoldCo into shares in Globe (Second Conversion Option). This collaboration with IDC not only enhances project credibility, but also attracts strategic investors and promotes cross-border collaboration in Malawi. This partnership with IDC aligns with Globe's commitment to sustainable growth and responsible mining practices.
Paul Smith, Globe's CEO commented:
'This planned funding from IDC represents a watershed moment in the development of Globe's Kanyika Niobium Project. The progress made throughout 2024 has been significant. This financial support will allow us to execute crucial components of Kanyika's development plan, headed by completing an updated bankable feasibility study, the detailed front-end engineering design tasks, and certain other pre-implementation activities. With the support of IDC and the announced debt financing from Ecobank Malawi, we have now locked in around 54% of the necessary funding for Phase 1 development of Kanyika, which we anticipate will commence in the first half of calendar 2025. We now look forward to providing further updates on our progress in the Phase 1 works over coming months.
Material details of the Term Sheet The Term Sheet is non-binding, is subject to certain conditions precedent, and has been prepared to outline the key clauses that the parties intend to incorporate into the binding loan, shareholders', and security agreements. The Term Sheet has been signed after the successful completion of an extensive due diligence process undertaken by IDC over the past 6 months. It is proposed that IDC will provide Project HoldCo with a secured convertible loan in the amount of USD 10 million, available partly in ZAR (ZAR 55 million) and partly in USD (USD 7.050 million), to fund completion of the BFS, FEED, and Early Works. The IDC will have the right to convert the Loans into shares in Project HoldCo at a 20% discount after completion of the BFS, FEED, and Early Works, and thereafter have the election to convert its shares in Project HoldCo into shares in Globe. IDC's shareholding after exercising the First Conversion Option is limited to a maximum of 25% of Project Holdco shares, and a maximum of 19.9% of Globe shares after exercising the Second Conversion Option. The conversion price will be based on the 30-day volume weighted average price of Globe's shares traded on ASX, calculated on the trading day immediately prior to issuance by IDC of a conversion notice. The interest rate on the USD portion is based on a 3-month Secured
Who is IDC IDC, established by the Industrial Development Corporation Act, No 22 of 1940 and owned by the South African Government, aligns its priorities with national policies like the National Development Plan. It aims for long-term sustainability, prudent financial management, and leadership in development finance. The Corporation's robust financial health is evident in its strong balance sheet, with ZAR 156.7 billion in total assets. A healthy profit of ZAR 7.4 billion enabled IDC to approve funding of ZAR 17.3 billion during 2024. During the 2024 financial year, IDC approved ZAR 2.7 billion for mining and upstream metals companies and established a junior mining exploration fund worth ZAR 400 million. A total of USD 53.4 million was allocated to a greenfield natural graphite mine in Tanzania, which is projected to produce 90,000 tons annually of battery-grade graphite. As of March 31, 2024, IDC's portfolio under management was valued at ZAR 94 billion, spread across 637 clients. Of this, ZAR 12.2 billion was deployed in the rest of Africa, while ZAR 81.1 billion was allocated within South Africa. The portfolio exposure includes ZAR 32.1 billion in equity and ZAR 61.2 billion in debt. To stimulate growth and expansion in the mining sector, IDC has developed a critical minerals game plan that focuses on the support for 17 minerals essential to the green economy and global transition to renewables, electric vehicles, hydrogen, and battery storage. 4 IDC is pivotal in driving economic development across Africa. Collaborating with regional banks like AfDB and DBSA, it funds projects for southern Africa's growth. With bilateral partners like UNDP and World Bank, it co-finances projects and shares expertise. Through cross-border investments in mining and energy, it boosts regional economies. It also promotes foreign investment, aids capacity building, and offers technical support to enhance development finance. These partnerships align with its goal of fostering industrialization and socioeconomic progress in South Africa and neighbouring nations, fostering resilient economies, and inclusive prosperity in the region
Contact:
Paul Smith
Chief Executive Officer
Tel: +61 8 6118 7240
Email: paul.smith@globemm.co
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