Graphex Secures Up to US$85 Million for Chilalo Development

Graphex Mining (ASX:GPX) has entered a deal to receive up to US$85 million in funding. The money could see its Chilalo graphite project in Tanzania funded through to production.

Working with Castlelake, a US private investment firm, the company will raise US$5 million immediately through issuing secured interim loan notes.

Graphex has also signed a term sheet for a senior funding package under which Castlelake and other market participants will provide up to US$40 million in equity and up to US$40 million from issuing senior secured loan notes.

“We are pleased to have agreed this financing transaction, which represents a major milestone for our company. We can now proceed with completion of the bankable feasibility study (BFS) with a view to Graphex becoming a leading supplier of premium, coarse flake graphite,” Graphex Managing Director Phil Hoskins said in a statement on Monday (October 29).

“We believe this transaction affirms the quality of the Chilalo project, the premium product it will produce, the graphite market opportunity identified by the company and confidence in the company’s ability to reach a satisfactory resolution in Tanzania,” he added.

The initial loan notes will be used to advance Chilalo to the point of meeting the conditions necessary for the senior funding package, including the completion of a BFS, the resolution of issues relating to Tanzania’s mining legislation and the execution of material contracts for offtake agreements, as well as mining and engineering, procurement and construction (EPC).

The final financing amount for the senior funding package will be determined by the BFS.

In late September, Graphex updated the prefeasibility study (PFS) for Chilalo with plans for a two-stage production scenario. Stage one will produce around 58,000 tonnes of graphite annually for the first two years of operation, while stage two will be an expansion starting during the third year that will bump production up to 104,000 tonnes annually for 4.3 years.

The PFS also indicates strong economics for the project, with a post-tax net present value of US$349 million, a post-tax internal rate of return of 131 percent, a post-tax payback period of less than a year and an 8.5-year mine life.

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Securities Disclosure: I, Olivia Da Silva, hold no direct investment interest in any company mentioned in this article.