- $16 million convertible loan facilities from South African State owned IDC
- Secures additional $10 million from a strategic investor
The Projects | Battery Minerals
Giyani Metals, the Canadian battery minerals company developing the Kanye Manganese project in Botswana has secured $26 million funding to advance its battery-grade manganese development, the company announced on 30th November 2023.
The financing comprises of convertible loan facilities amounting to $16 million (R300 million, over P210 million), from the state owned Industrial Development Corporation (IDC) of South Africa, having signed definitive agreements with development finance institution.
Additionally, US$10 million of funding is in the process of being secured from a strategic investor who has signed a non-binding term sheet, completed its due diligence and is currently in the final documentation stage.
The IDC financing is the cornerstone of a US$26 million funding package that will over the next 15 months progress K.Hill to a Final Investment Decision (“FID”), including an Optimized Feasibility Study for the Project (“Optimized FS”) and operating the Company’s demonstration plant which will produce (“HPMSM”) for qualification testing by potential customers.
The IDC is a major South African development financing institution with over 80 years of experience investing in industrial companies and the mining sector, with US$8.5 billion of assets and who typically invests over US$1.0 billion each year in mining and infrastructure related projects.
The US$16 million IDC Facility will be split into two separate facilities with similar terms attached. A US$12.5 million convertible loan facility for use by Giyani Metals South Africa Proprietary Limited and a US$3.5 million convertible loan facility for use by Menzi Battery Metals (Proprietary) Limited, both wholly owned subsidiaries of Giyani Metals. Both will be provided in South African Rand equivalent up to a maximum of ZAR 300,000,000.
The IDC Facility may be drawn down in tranches by Giyani’s local subsidiaries in South Africa (GMSA) and Botswana (Menzi) to complete the final stages of construction and commissioning of the Demonstration Plant, and importantly, fund the operational phase to produce final product for off-taker testing and potential customers.
Alongside this, the Optimized FS will be prepared, building on both the Feasibility Study completed in 2022 and the recently released 2023 Preliminary Economic Assessment to define the final construction economics and enable FID.
Interest will accrue in ZAR on drawn amounts on a daily basis from the relevant drawdown date, compounded monthly in arrears at the South African Prime Rate (currently 11.75%) plus 3%.
Giyani will be able to draw down the funds until March 31, 2025, with any portions of the IDC Facility that have not been drawn down at that time being cancelled without penalty. The final repayment date of the IDC Facility, if not converted, will be 48 months from the first draw down date.
Certain criteria are attached to the IDC Facility including (i) completion of the construction and commissioning of the Demonstration Plant by the first anniversary of the first drawdown date, provided that this date may be extended to no later than June 30, 2025, subject to Giyani demonstrating that it has secured sufficient Project development funding to achieve FID; and (ii) completion of the Optimized FS within 90 days after construction and commissioning of the Demonstration Plant has been completed and is producing HPMSM within defined specifications.
The IDC has the option to convert the outstanding amount of the IDC Facility into shares (and shareholder loans) in Thabatala Holding (Proprietary) Ltd (“Project HoldCo”) or shares in Giyani (the “Giyani Shares”).
The option is exercisable by the IDC on two occasions, the first being after completion of the Optimized FS and successful operation of the Demonstration Plant, and the second being after Giyani has achieved FID.
The conversion will occur at a 20% discount to the then prevailing 30-day volume weighted average price of the Giyani Shares, subject to a minimum share price equal to the closing price of the Giyani Shares on the trading day immediately prior to this announcement (the “Minimum Share Price”).
The percentage shareholding acquired by the IDC following conversion will be limited to a maximum shareholding of 19.9%, or such higher percentage as may be approved by the TSX Venture Exchange (the “TSXV”), Giyani and its shareholders.
If the IDC elects to convert the outstanding amount of the IDC Facility into shares (and shareholder loans) in Project HoldCo, then the IDC will have a further option, exercisable upon the Project achieving sustained commercial production, to exchange its shares and shareholder loans in Project HoldCo for Giyani Shares.
The conversion will occur at the then prevailing 30- day volume weighted average price of Giyani Shares, subject to the Minimum Share Price and the Maximum Shareholding Percentage.
The IDC Facility will be comprehensively secured in favour of the IDC through a guarantee given by Giyani and each of the subsidiaries associated with the Project in favour of the IDC, along with pledges of their respective shares and loan accounts, and security granted by Menzi, GMSA and Thabatala Technology Company (Proprietary) Ltd over the K.Hill assets.
Danny Keating, President and CEO of Giyani Metals, hailed the capital raising as a major milestone in the progression of the K.Hill project “We are delighted to announce the IDC funding as a resounding vote of confidence in K.Hill. This brings on board a strategic partner with significant mining and industrial development experience. The investment provides the majority of the financing that Giyani requires to de-risk the Project through to FID and introduces a partner with a vision and ambition to be involved in the development and capital funding of the Project.
The demand for HPMSM projects with robust economics has never been stronger as financial institutions begin to understand the enormous demand for this critical mineral as the world moves definitively towards electric vehicles. We look forward to commencing operations at the Demonstration Plant to enable the distribution of samples to potential customers as we finalize our sales and off-taker strategy for the commercial scale plant to be built in Botswana.”
Joanne Bate, Chief Operations Officer of IDC said the corporation has developed a value chain strategy which focuses not only on the new minerals critical for net zero, but also on their processing towards precursor materials, through conversion into cell manufacturing, battery development, assembly and recycling.
“We are excited by the potential of Giyani and see K. Hill as an important step in IDC’s strategy to help initiate the development of a battery minerals industry in Southern Africa.”