Volt’s strategy is to fast-track mining operations at its flagship Namangale graphite project in Tanzania in order to facilitate the transition to producer status and commence generating cash flow.
The terms of the convertible loan funding demonstrates the confidence that these investors have in Volt’s strategy.
Trevor Matthews, CEO, commented: "After considering various short term funding initiatives, the board agreed the optimal solution was the convertible loan facility given the very attractive pricing available.
“The funds raised from the facility will be enough for Volt’s working capital purposes for the rest of the year.”
Funding expected from options
During the fourth quarter of 2017, the board expects circa $4.8 million will be received from the exercise of Volt’s listed $0.02 options which mature on 31 December 2017.
Furthermore, negotiations with Middle East and Chinese counter parties to provide long-term working capital and project development funding for Stage 1 of the Namangale project are planned to conclude well before the end of calendar 2017.
This will support Stage 1 construction commencement in Q4 2017.
Convertible loan details
The key terms of the convertible loan facility are as follows:
- Convertible loan facility for 12 months, with a 10% coupon payable quarterly in arrears in cash or Volt shares (lenders election to receive interest in the form of Volt shares issued at the conversion price);
- Lenders can convert the facility into Volt shares at any time prior to maturity at a conversion price of $0.05 per Volt share;
- Volt can prepay amounts owing under the facility at any time, provided always that Volt will be liable to pay the balance of any interest which would otherwise have become payable if the facility was repaid on maturity;
- If the facility is repaid early by Volt, lenders will have a subscription right to acquire Volt shares at the conversion price at any time prior to the agreed maturity date (up to the maximum number of Volt shares which the lender would have been able to acquire if the lender converted amounts owing under the facility); and
- Senior security over Volt’s assets can be put in place at the lenders’ election.
The key benefits from progressing with this convertible loan facility in its current form are:
- Funds are immediately available for working capital purposes;
- Dilution at less than 2% on a fully diluted basis; and
- Conversion pricing is attractive.