The loan from Janata Sahakari Bank requires no repayments until production begins and is guaranteed by its JV partner Metachem, which underscores their confidence in the PGT business.
This allows Evion Group (ASX:EVG) to use its cash reserves to continue development of its Maniry graphite project in Madagascar, which will supply graphite concentrate to PGT once it is in production.
Additionally, completion of the project financing paves the way for the project to receive substantial rebates for power and other local costs as part of the Special Economic Zone concessions available at the site in Pune within Maharashtra state.
PGT will have initial production capacity of 2,500tpa of expandable graphite, which is used in a wide range of applications ranging from fire retardant building materials to fuel cells, with its modular design allowing for a very cost effective planned increase to 5,000tpa within two years.
Initial production is already covered by binding sales contracts.
“This highly favourable debt package is a major achievement for our expandable graphite joint venture in India,” managing director Tom Revy said.
“Debt funding this development also means our JV will qualify for very favourable power and other rebate concessions as part of the SEC incentives in this region.
“With the debt funding and binding offtake contracts in place, we are well on track to starting commissioning later this year.”
The loan from Janata Sahakari Bank gives the joint venture up to eight years to repay the loan, which has an interest rate of 9% – discounted from 11%.
It also features a dry period, during which no repayments are required, of 12 months from draw down.
Evion expects repayments to be met from operational cash flow.
Stage 1 revenue is projected to be about US$7.5m per annum, growing to over US$17m once Stage 2 is operational.