EcoGraf Ltd (ASX:EGR) has implemented several actions to preserve shareholder funds amid the ongoing COVID-19 pandemic while maintaining the positive business progress that has been achieved in recent months.
Non - executive directors have agreed to waive their fees and the managing director, executive director and management salaries will be reduced by 50% with salary payments currently suspended.
The executive director salary reduction is in addition to the 50% reduction made last year to reduce costs in Tanzania.
Additionally, since the beginning of the year, EcoGraf has reduced all non-essential project development expenditure in Tanzania as it focusses on progressing the US$60 million KfW-IPEX Bank debt financing proposal.
In its latest business and financing update, the company stated that the measures it is taking reflect their commitment to aligning interests with long-term shareholders and stakeholders as well as their determination to build a successful graphite business to become a major, long-term supplier of responsibly produced graphite products.
“Business as usual” basis
In recent weeks, the company’s personnel have transitioned to remote working arrangements in accordance with government requirements.
EcoGraf continues to operate on a ‘business as usual’ basis, using video and teleconferencing facilities to progress project development programs and discussions with potential customers, debt financiers and external consultants.
Kwinana Battery Graphite facility
The company’s key focus is to finalise funding arrangements for the Kwinana Battery Graphite facility.
The Australian government agency Export Finance Australia has confirmed, subject to completing a detailed assessment of the project, it will consider the provision of debt finance for the new US$72 million development.
EcoGraf is currently assisting Export Finance Australia to complete the necessary commercial and technical due diligence processes for the potential debt financing arrangements, while also engaging with potential customers to secure offtake arrangements, finalising construction arrangements and completing permitting for the 6.7ha industrial site.
On March 20 the company submitted a US$60 million financing proposal to the Government of Tanzania for the construction of the new Epanko Graphite Mine.
The proposal was developed in conjunction with KfW IPEX-Bank with the aim of simplifying and fast-tracking the entire debt financing process in Tanzania.
With an operating life of more than 40 years, the Epanko Graphite Mine is forecast to provide intergenerational benefits for the regional community and will directly contribute over US$2 billion to Tanzania through local procurement of goods and services, employment, royalties, taxes, dividends and inspection fees.
Subject to reaching an agreement with the Government of Tanzania, the company and KfW IPEXBank are ready to proceed to prepare formal loan documentation that will enable the proposed financing arrangements to be implemented.
The on-going support the company has received from KfW IPEX-Bank and offtake customers in Germany and Asia has been critical to this process and EcoGraf remains committed to establishing Epanko as a new supplier of responsibly produced, high-quality natural flake graphite products.