Karo holdings seeks to raise US$260m to fund platinum project

PLATINUM miner Karo Mining Holdings says negotiations to raise US$260 million debt capital to fund the Karo Platinum Project are in progress at a time when directors are confident that the group will continue to operate for the foreseeable future, its latest financial update shows.

Karo’s multimillion-dollar platinum mine is one of several multi-million dollar projects that took off and have seen rapid development progress since President Mnangagwa’s pro-business administration came into power in 2017.

The special grant awarded to Karo Platinum is located in the Great Dyke in the Mashonaland West, approximately 80kilometres southwest of Harare and 35km southeast of Chegutu, south of the Zimplats (Zimbabwe’s largest platinum producer) Selous Metallurgical Plant and north of the Zimplats Ngezi operations.

The Great Dyke is a Platinum Group Metals (PGM) bearing geological feature that runs from north to south in Zimbabwe. It is approximately 550km in length and up to 11km wide, second to the Bushveld Complex of South Africa, the world’s largest platinum producer, in terms of its PGM resource base.

In its audited abridged group results for the year ended 30 September 2023, the firm said Tharisa plc initially provided a loan facility of US$8 million to fund the initial exploration activities.

In 2022, the amount was settled by the company through the issue of new ordinary shares.

It noted that as part of the equity and quasi equity to be raised by the company as part of the funding of the Karo Platinum Project, Tharisa plc committed to provide US$135 million of funding to the Karo Platinum Project, of this amount US$65 million has been received.

“The balance of US$70 million is available for draw-down. In addition, negotiations are in progress to raise US$260 million debt capital in order to fund the Karo Platinum Project.

“Negotiations are well advanced by Karo Platinum on a senior project finance facility and a term sheet has been agreed with a consortium of lenders, supported by political and commercial risk insurance, for an amount of US$160 million,” it said.

It further noted that negotiations for the balance of the funding are on-going and the alternatives include commodity pre-payments, by-product and base metal streaming transactions, working capital facilities and possible strategic investors.

“Advisors have been appointed to advise Karo Platinum on these alternatives. The prospects of success are considered high based on the long asset life of the project and core commodity fundamentals,” it said.

The mining entity added that directors have and will continue to review the spending, investment and commitments in the project and have prepared scenarios to match the project commitments and funding availability should it be required to maintain available funds for the foreseeable future.

“Consequently, the directors consider that, as at the date of approval of the consolidated financial statements, the group will continue to operate for the foreseeable future,” it said.

The company raised US$36,8 million through the US dollar-denominated structured debt instrument that was successfully listed on the VFEX.

The funds raised are being used to partially fund the development of phase 1 of the Karo platinum project.

Karo commenced with bulk earthworks and the construction of civils in December 2022.

The first concrete was poured in June 2023. In the same month, open pit pilot mining commenced with the objective of optimising the mining methods and producing ore to further test and refine metallurgical processing.

At name plate capacity, Karo will process approximately 2.5 million tonnes per year of ore and produce 190 000 ounces of PGMs annually.

The firm said first ore in mill is now planned for June 2025 while the project work-streams have been divided into smaller commitments to ensure continued development aligned with funding availability.

Manufacturing of key long-lead items is nearing completion as of the statement of financial position date, it added.-chronicle