Standard Chartered backs Australia-listed manganese miner
Standard Chartered Principal Finance has provided a $50 million debt financing package for OM Holdings (OMH), an Australian Securities Exchange-listed mining company, and several of its affiliates.
The capital will be used to refinance maturing debt and to support the expansion of operations, in particular the construction of a smelter in Malaysia that will provide silicon-based ferroalloys to Asia's steel industry.
The investment is structured as a senior secured loan with warrants equivalent to a 3.5% equity stake in OMH. According to a regulatory filing, the debt facility comprises a non-amortizing term loan of $26 million to refinance an existing loan and a three-year working capital tranche of $24 million.
OMH is one of Asia's largest specialized producers of manganese, which most commonly used in steelmaking in the form of a ferroalloy. The company operates mines in Australia's Northern Territory and the Northern Cape of South Africa, which holds 80% of global manganese resources. It has smelting facilities in China and is developing the OM Sarawak project in Malaysia.
OMH said in a 2013 presentation that the Sarawak project is supported by a $215 million and MYR436 million ($132.8 million) finance facility provided by a syndicate of international and regional banks. A further 30% of the project will be funded through equity investment. There are off-take agreements with Hanwa and JFI Shoji and with Norway-based Fesil Sales.
Production is expected to begin in the second quarter of 2014, with output in the first phase of the project estimated to be 308,000 tons of ferroalloys per annum.
OMH posted a net loss of A$60.8 million ($56.1 million) for 2012 following a loss of A$11.7 million the previous year. Revenue increased from A$389.7 million to A$408.2 million over the same period.
Standard Chartered Principal Finance is the private equity and mezzanine investment arm of Standard Chartered Bank. It typically targets companies in need of expansion capital or acquisition finance, as well as supporting management buyouts.
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