Verdant Locks in AU$160-million Term Sheet for Phosphate Project

Verdant Minerals (ASX:VRM) has secured a non-binding indicative term sheet for a long-term debt facility of up to AU$160 million from the Northern Australia Infrastructure Facility (NAIF). 

The potash– and phosphate-focused company’s share price jumped 18.75 percent on Monday (December 3) after the announcement, ending the day on the ASX at AU$0.019.

The term sheet will help the company move forward at its Ammaroo phosphate project in the Northern Territory, and is subject to conditions including the execution of offtake agreements, the receipt of equity funding and the conclusion of a cost benefit analysis.

Among other things, Verdant will also have to finalize senior debt funding for the remainder of the project debt, and conduct high-level due diligence on a range of project matters.

“This is a significant milestone for the project and will assist in facilitating and enhancing ongoing discussions with providers of commercial debt, potential customers and development partners,” Verdant Managing Director Chris Tziolis said in a statement.

He added, “Verdant Minerals is appreciative of the opportunity to work with NAIF on the development of the Ammaroo phosphate project. The issuance of the indicative term sheet and NAIF’s support to provide a long tenure concessional loan, subject to meeting the conditions precedent, will secure a significant portion of the project’s debt funding.”

Located 220 kilomters southeast of Tennant Creek, the Ammaroo project area contains the billion-tonne, 40-kilometer-long Ammaroo phosphate JORC resource, in addition to the satellite Ammaroo South JORC resource and the Rockhole phosphate prospect. Both a feasibility study and environmental impact assessment have been completed for Ammaroo.

Released in May, the Ammaroo feasibility study shows the project will require capital of AU$368 million for stage 1 and AU$200 million for stage 2.

Stage 1 will include initial production of 1 million tonnes per year (Mtpa) of phosphate rock concentrate and enabling infrastructure, while stage 2 is set to be an expansion to 2 Mtpa of phosphate rock concentrate after year five of production.

Going forward, Verdant is working to progress all of the term sheet conditions, along with other project initiatives, in order to reach a final investment decision by the NAIF in mid-2019.

The company also announced on Monday that it is in the final stages of concluding a native title agreement for Ammaroo, another checklist item for Verdant before a final investment decision.

Verdant holds numerous other assets in the Northern Territory, including several potash and phosphate projects, as well as a silica property.

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