In an update on its operations and finances, Mincor said it had requested a waiver from its lender BNP Paribas to test the historical debt service cover ratio on June 30.
That is five days before Wyloo Metals’ $1.40 a share on-market takeover offer is due to close.
The Brett Lambert-chaired board of Mincor is continuing to recommend shareholders accept the offer from the Andrew Forrest-controlled company, warning of risks associated with rejecting the offer and remaining a minority shareholder. Wyloo holds 72.7 per cent of the takeover target.
Mincor on Monday said failure to secure a waiver would be considered an “event of default” under a syndicated facility agreement with BNP Paribas, which provided a $30 million revolving credit facility.
The facility, which has been extended to the end of March next year, reduced to $27.5m following a $2.5m payment in March this year and remains “fully drawn”.
Mincor noted the lender could exercise certain rights under the finance documents, including demanding accelerated repayments, which could have a “material adverse effect” on its activities and financial condition.
BNP Paribas has until June 19 to complete its review, and Mincor can continue to receive rollover loans in the meantime.
“At conclusion of its review . . . there is a risk that BNP Paribas may require repayment of all amounts outstanding, and all costs (including hedge repayment) may become due and payable,” Mincor said.
“Mincor would need to obtain alternative sources of funding which may be in the form of new debt or equity, and the terms of any new funding may not be as attractive as the current arrangements, or in the case of new equity it may be dilutive to existing shareholders.”
Mincor on Monday also said it was on track to produce 600,000 tonnes of ore earlier than planned after strong production to date in the June quarter.
It reported nickel-in-concentrate production of 1839t in the June quarter and 5161t for the year to-date, pending May assay results.
“In May 2023, underground operations have mined 49,955t of ore month to date, thereby on track to achieve nameplate capacity of 600,000t per annum, earlier than planned,” Mincor said in a production update.
The company said ore delivery of 103,005t over the quarter to-date — compared to 87,248t in the previous period — included 7569t of lower grade material which was less than one per cent nickel.
Mincor in March revealed a product quality dispute with its sole customer, BHP, saying some of the material it had supplied to the miner’s Nickel West operations had not met requirements.
As of May 27, Mincor said it had 24,745t at 2.4 per cent nickel or about 617t of nickel-in-ore, stockpiled.
“Stockpiled ore may be blended as and when more blending options become available from mining operations and then delivered to BHP,” Mincor said.
“Mincor continues to work closely with BHP to manage the specification of ore parcels delivered, and if parcels are not blended during the month, then the parcel is stockpiled for future blending opportunities. Approximately 6000t of the stockpiled ore balance at 31 March 2023 has been blended and delivered to BHP during the June 2023 quarter so far.”
Mincor reported a cash balance of $42.1 million as of March 31, which included $26.1m from BHP for nickel concentrate for ore deliveries up to the end of April.
