Mayur Resources agrees US$155 million (A$235 million) funding to complete Central Lime Project

By: PNG Business News April 22, 2024

Mayur Resources Limited is pleased to confirm that it has executed definitive debt financing agreements with Appian Capital Advisory LLP (Appian) for a total of approximately US$115 million. This financing, combined with Vision Blue Resources’ (Vision Blue) proposed equity investment into the project of US$40 million announced in November 2023, would see the Central Lime Project (CLP) fully funded. The funding would be used to cover construction costs to achieve an annual base case nameplate production capacity of 400,000 tonnes(a), along with an allocation for expected further expansion. First quicklime production is expected to begin 18 months after financial close.

Key Points:

  • • US$155 million (A$235 million) secured through a combination of debt and equity comprising:
    • Approximately US$115 million senior secured loan and royalty financing arrangement from Appian, a leading metals and mining private equity and credit investor, comprising US$70 million to achieve CLP base case nameplate capacity, a US$22.2 million over-run facility and US$22.2 million for expansion beyond base case capacity.
    • US$40 million in previously announced proposed equity funding from Vision Blue, a clean energy battery metals transition investment vehicle led by Sir Mick Davis, in exchange for a 49% equity stake in the CLP (with Mayur retaining a 51% majority stake).
  • In Q2 CY24, Mayur will work to complete remaining conditions precedent to the debt and equity funding on items including but not limited to, product offtake, appointing construction contractors and finalisation of project documentation with, and approvals from, the PNG Government. Assuming satisfaction of the conditions precedent, financial close would be announced.
  • The debt and equity would provide 100% of the funding required to complete the base case construction works, implement onsite carbon reduction initiatives and enter commercial production, with Mayur’s share of annual EBITDA from the base case expected to be US$12.8 million (A$19.4 million)(a). Additionally, US$22.2 million of Appian funding is earmarked to contribute to a potential expansion which could double production capacity and associated EBITDA through construction of additional kilns on the CLP project site.
  • Post financial close, it is expected to take 18 months until first quicklime production begins. Additionally, the project is set to generate cash flow ahead of construction completion through the sale of unprocessed limestone, with discussions currently underway.
  • The CLP aims to cornerstone the first downstream manufacturing processing hub in PNG, generating hundreds of new jobs and with the potential to be a major displacer of PNG’s imported lime products.
  • Mayur will be the closest source of quicklime, hydrated lime, and crushed limestone to Australia, enhancing the resilience of the supply chain of these critical materials while reducing logistics cost and carbon footprint.
  • The CLP is strategically located within Mayur’s unique Single Factory Special Economic Zone in Port Moresby’s North-Western Growth Corridor, including the US$19 billion PNG LNG facility, the US$10+ billion Papua LNG development and Kumul Petroleum Fabrication Facility.
  • Upon financial close, Mayur, as the parent company, will receive a reimbursement from the CLP project joint venture company for the early construction costs incurred for wharf development.

Mayur’s Managing Director, Paul Mulder commented:

“Today marks the key funding milestone in delivering the CLP, which will be a transformative development for Papua New Guinea’s Landowners, Central Province and the broader manufacturing sector. Hundreds of new jobs, support service businesses, electricity, roads, education/health facilities are all part of the benefits that will be created for Landowners, whom to date, have lacked such basic services and have been negatively impacted by isolation. As the nation’s inaugural industrial downstream manufacturing processing hub, the CLP will also materially contribute to the clean energy transition by providing a key input to the processing of energy transition metals in the region.”

“The project has successfully attracted finance from both Appian and Vision Blue, bringing both debt and equity to the table in a first for PNG. This investment sets the foundation to showcase PNG’s vast potential for small to medium manufacturing projects connected to its natural resources.”

“The support provided by the PNG Marape-Rosso Government is a testament to their commitment to supporting downstream processing and assisting in attracting such reputable investment funds into PNG’s first Single Factory Special Economic Zone. Such support now sets the scene for PNG to compete with the hundreds of billions of dollars already invested into Southeast Asian Special Economic Zones.”

Appian Capital Advisory CEO & Founder, Michael W. Scherb commented:

“Appian is excited to partner with Mayur and Vision Blue on the Central Lime Project in Papua New Guinea. CLP is a leading asset, set to produce low-cost lime products for metal processing, strategically located close to end markets in Australia and Asia. The project will also play a pivotal role in highlighting foreign direct investment in PNG, supporting the country’s growing industrial sector. This collaboration showcases the ongoing success of Appian's dedicated credit and royalties offering, highlighting the significant value our team brings to the delivery of mining assets globally.”

Construction Activities

Construction of the CLP commenced in mid-2023 with primary activities to date being the wharf infrastructure. Commencing the wharf infrastructure early has allowed Mayur to optimise construction logistics and shorten the project’s development schedule. Additionally, the Company expects to generate early revenues through the sale of raw limestone aggregate from this wharf during construction of the kilns.

As Mayur has funded this construction to date, the Company will receive a reimbursement from the CLP project joint venture company. This reimbursement will add to Mayur’s working capital at the parent level.

Significant Lime Resource and Future Expansion Potential

Mayur has previously reported JORC Mineral Resource Estimates of 382Mt of limestone – all within the Mining Lease of the CLP(b). The original ‘base case’ definitive feasibility study used only 30Mt of this total resource, presenting extraordinary upside potential for Mayur and warranting future investment towards increasing the number of kilns at the Project beyond the two initially modelled, which has the potential to scale annual EBITDAs linearly with the number of kilns.

Further Disclosures

Further disclosure of the terms of the definitive financial agreement with Appian are set out in Annexure A. The terms of the agreements with Vision Blue were disclosed on 14 August 2023 and were finalised by way of definitive transaction documents on 6 November 2023. The Company notes that it has also provided details of the financing in converted A$ terms, but re-iterates the financing from both Appian and Vision Blue is expressed in US$ terms in the definitive agreements, and will be funded by both parties in US$ terms. The exchange rate used in these calculations is 0.66 AUD/USD.

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