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- Non-binding indicative debt terms received from number of financiers
- Majority of proposals supporting up to 70% project gearing for Watershed
- Debt, strategic investment, offtake-linked funding and other funding alternatives being examined
- Company positioning to become potentially one of the world’s largest and most strategically important tungsten suppliers
Tungsten Mining (ASX: TGN) has achieved an early breakthrough in its funding strategy for the Watershed tungsten project in Queensland with the receipt of non-binding indicative debt terms from a number of financiers.
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Since Cutfield Freeman’s was appointed as debt advisors in late August the company has received proposals supporting gearing of up to 70% of the Watershed pre-production capital cost of $274 million, equating to around $200 million of potential debt funding.
Cutfield Freeman & Co and Jefferies, which was named as financial advisor last week, are now progressing complementary debt and strategic investment workstreams, alongside the company’s ongoing offtake discussions and assessment of government-supported funding.
One of the proposals received includes the issue of equity-linked securities over TGN shares to the lender as part of the financing package.
Meanwhile, Cutfield Freeman is running a competitive debt process across a number of financing channels, including private credit funds, commercial banks and Nordic/fixed-income bonds.
Discussions with selected parties are progressing towards more detailed terms, while other prospective financiers continue to review the project through a virtual data room.
Chairman, Gary Lyons, said the company intends to assess the available debt alternatives across pricing, structure, tenor, security, flexibility and execution requirements before determining the preferred debt solution for Watershed.
“The recent equity placement provides a strong capital base from which to complete pre-FID work at Watershed and progress towards the procurement of long-lead items necessary to match prospective customer timelines. Our objective now is straightforward: secure the remaining funding at the lowest practicable overall cost of capital while preserving flexibility for Mt Mulgine,” Mr Lyons said.
“Cutfield Freeman is leading the debt process, and Jefferies is leading engagement with potential strategic investors, with offtake discussions progressing at the same time. We want these funding sources to compete with and complement one another so we can select the most appropriate mix for Watershed.
“The proposed US listing should also be viewed as part of the longer-term strategy. While it will broaden our access to US investors, it is also being pursued to increase TGN’s visibility with potential customers, industrial partners and strategic investors in a market where secure tungsten supply is strategically important.
“Bringing Watershed into production will strengthen TGN’s operating, financial and commercial position to advance Mt Mulgine, with the two projects together positioning the company to become potentially one of the world’s largest and most strategically important tungsten suppliers.”
Offtake discussions are also progressing alongside the funding workstreams, with TGN to assess any offtake arrangements in the context of the overall Watershed funding package and its longer-term commercial requirements.
TGN was steady at 25.5¢ with a Mkt cap of $395.9M prior to markets opening.
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