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Pan-African bank Absa Bank, through its Corporate and Investment Banking division, has conditionally approved a credit term sheet for its 50% participation in an about $160-million syndicated loan facility for London-listed Pensana’s Longonjo rare earths project, in Angola.
This is subject to the conclusion of definitive loan documentation and the fulfilment of conditions precedent contained therein, as well as obtaining political and commercial risk insurance cover from a reputable political risk insurer on Absa’s exposure under the facility.
The facility will provide senior funding for the Phase 1 development of the company’s Longonjo mine through Pensana’s 84%-owned subsidiary Ozango Minerais.
The debt financing will look to deliver about 60% of all project funding for Longonjo, with the balance of 40% to be funded through equity provided by Ozango.
Pensana chairperson Paul Atherley highlighted this as an important step towards finalising funding for a project.
He posited that it would have a positive impact on the community, creating over 600 high-value jobs, of which over 50% are expected to be allocated to young people.
Once in full production, the project will create an estimated 2 400 direct and indirect jobs and will produce about 5% of the world’s magnet metal rare earths used for wind turbines and electric vehicles, he adds.
The agreed term sheet follows the successful completion of a detailed technical, marketing, environmental and fiscal due diligence process and conditional approval of the loan by Absa’s credit committee, with the legal due diligence process to be finalised.
Pensana has spent over $70-million over the past six years on exploration, technical and environmental studies on the Longonjo project.
The project will cost over $325-million to bring into full production, while operating expenditure over its 20-year-plus mine life is estimated at about $2.3-billion.
