Construction at Kupang, East Nusa Tenggara Province - Photo by the Company.

JAKARTA (TheInsiderStories) – Australia’s manganese company, Gulf Manganese Corporation (ASX: GMC) is back on track to complete the construction of the Kupang industrial estate smelting hub in Indonesia’s East Nusa Tenggara province after clinching a €52 million (US$57.97 million) loan facility, the company announced on Wednesday (01/08).

The smelting specialist today announced it has inked a binding term sheet to establish the facility with Glacier International Depository, Legal and General Investment Management and HSBC Bank. Proceeds are expected to be received by the end of January, Gulf reported.

The Kupang smelting hub will contain at least eight furnaces built in stages over a five-year period. At full production, the first two furnaces will produce some 320 000 t/y of manganese ore to deliver some 155 000 t/y of premium-quality ferromanganese alloy.

“We are delighted to have finally secured this facility and I can confidently reassure shareholders that we now have a clear line of sight on the pouring of first metal at Kupang,” Gulf managing director Hamish Bohannan said.

The company has been constructing a ferromanganese processing hub at Kupang in West Timor but has struggled to secure finance to take the project to completion. In an investor presentation released in mid-November, Gulf said construction was more than 60 percent complete with commissioning and first commercial alloy sales anticipated during the first quarter of 2020.

However, Gulf still needed about $13 million to complete the first two smelting furnaces. The company was suspended from the ASX’s official quotation on December 18 and requested a voluntary suspension extension on Christmas Eve.

Following today’s announcement confirming the loan facility, the company has now been reinstated. The new loan facility will now enable Gulf to fully fund the construction and commissioning of the first two smelters at the hub, with completion and the pouring of first metal expected in the third quarter of 2020.

“With $13-million required to complete the construction and commissioning of our first two smelters, we now have ample capacity to fast-track high-impact mining and exploration programs targeting Indonesia’s abundance of high-grade manganese ore deposits,” Bohannan said.

The loan will have a term of two years and an interest rate of 14.5 percent a year and will be repayable in full in a lump sum at the end of the loan term. Gulf will be required the pre-pay one year’s interest on the loan at the start of the loan period. In addition, a loan restructuring fee of 4 percent plus third-party underwriting and associated transaction costs will result in Gulf receiving an amount of €40-million.

In addition to funding the construction of Kupang, the loan facility also provides Gulf with the ability to ramp up its high-grade manganese mining and exploration activities in Indonesia, taking advantage of its license to export manganese concentrate and to advance its strategic joint venture with Iron Fortune in Timor Leste.

“We look forward to delivering a number of high-value accretive milestones in the near-term and even more significantly over the longer term,” Bohannan said.

“This is a transformational step for Gulf and we are now firmly on the road to becoming a leading global ultra-low carbon ferromanganese producer this year,” Gulf chairman Craig Munro added.

€1=US$1.12

Written by Lexy Nantu, Email: lexy@theinsiderstories.com