Metal Tiger (LON:MTR), the London Stock Exchange AIM listed investor in strategic natural resource opportunities, has announced that, following the receipt of 6,296,990 new ordinary shares in Sandfire Resources NL (ASX:SFR), announced on 23 October 2019, it has entered into an equity derivative collar financing arrangement with a global investment bank pursuant to an Equity Option and Loan Facility.
The Financing Arrangement is secured over 1,675,125 of the ordinary shares in the capital of Sandfire held by Metal Tiger, representing approximately 0.9% of Sandfire’s issued share capital.
Under the terms of the Financing Arrangement, Metal Tiger has:
- entered into a stock lending arrangement with the Lender, pursuant to which the Lender (or an affiliate of the Lender) can borrow up to 1,675,125 Sandfire Shares from Metal Tiger;
- obtained the right (but not the obligation) to sell 1,675,125 Sandfire Shares to the Lender in three years’ time at 80% of the reference price, being A$6.10 (subject to customary adjustments) (the “Reference Price”) (the “Put”);
- granted the Lender the right (but not the obligation) to buy 1,675,125 Sandfire Shares from Metal Tiger in three years’ time at an agreed premium of 145% of the Reference Price (the “Call”); and
- borrowed A$8,174,610 from the Lender secured on the combination of the above with a maturity date of 16 December 2022 (the “Loan”).
Metal Tiger has the right to elect to settle the Put and the Call by way of physical delivery of Sandfire Shares or by way of a cash payment reflecting the value of the Put and Call at the time.
Costs of approximately A$0.675m associated with the financing arrangements (inclusive of all interest obligations and the net cost of the equity derivative collar for the term of the initial Financing Arrangement) have been deducted from the Loan proceeds of approximately A$8.175m to leave Metal Tiger with A$7.5m of cash proceeds to fund:
– Metal Tiger’s proposed share buy back (announced on 15 October 2019 and approved by Metal Tiger’s shareholders at a general meeting of the Company on 6 November 2019);
– Metal Tiger’s participation in the Cobre IPO (as per the Metal Tiger announcement dated 20 November 2019);
– existing and new public and private investments; and
– general working capital requirements.
Metal Tiger can agree with the Lender to utilise the balance of Sandfire Shares held by it to increase the size of the Financing Arrangement at a later date. If the total Loan balance outstanding on 30 June 2020 is less than A$20m, Metal Tiger will be required to pay a commitment fee (“Commitment Fee”) to the Lender, the maximum Commitment Fee payable by Metal Tiger is A$118,254.
Commenting on the financing arrangements, Mr Michael McNeilly, Chief Executive Officer of Metal Tiger, said:
“Metal Tiger has been very pleased with its investment initially in MOD Resources Ltd and now Sandfire Resources NL. We look forward to executing on our strategy of investing in strategic natural resource opportunities by way of the cash raised through this financing facility and note that the financing is not only cost effective but importantly does not include any share price based triggers.”
This announcement contains inside information for the purposes of the market abuse regulation (EU No. 596/2014) (“MAR”).