ICBC contributes to the $20 million USD up-sizing of a $130 million USD syndicated loan for the Ngungaju Plant Project (Linked to Record ID#95188)

Project narrative

In September 2020, BNP Paribas S.A. and the Clean Energy Finance Corporation (CEFC) entered into a $110 million USD senior secured syndicated loan facility with Pilgangoora Operations Pty Ltd — a special purpose vehicle (SPV) wholly owned by Australian lithium and tantalite mining company Pilbara Minerals Ltd. — for the Pilgangoora Lithium Mine Refinancing Project. This loan carried a maturity period of five years and an average interest of approximately 5%, with quarterly interest-only payments for its first two years, quarterly amortization over years three to five, and a bullet repayment of $36 million USD on maturity. This facility was secured. BNP Paribas committed $73.3 million USD and CEFC committed $36.7 million USD. BNP Paribas also committed a $15 million USD working capital facility to Pilbara Minerals. Then, on June 4, 2021, BNP Paribas transferred a $10 million USD portion of its $73.3 million USD commitment to the $115 million USD syndicated loan for the Pilgangoora Lithium Mine Refinancing Project to the Industrial and Commercial Bank of China (ICBC) and a $20 million USD portion to Société Générale S.A. (SocGen), leaving its commitment as $43.3 million USD. The final maturity date was June 30, 2025. Record ID#95188 captures ICBC's contribution. The proceeds of this facility were used by the borrower to refinance a $100 million USD Nordic Bond senior debt facility used to support the Pilgangoora Lithium Mine, a lithium-tantalum mine and two processing facilities (Pilgan Plant and Ngungaju Plant) with a nameplate capacity of 2 million tons per annum (mtpa) spodumene concentrate and a by-product of a tantalite concentrate, located in the Pilbara Region of Western Australia, 120 kilometers from Port Hedland. The project began commercial operations in April 2019 and had an expected life of 50 years. Then, on November 22, 2021, financial close was reached on a deal in which the four-bank syndicate — ICBC, SocGen, BNP Paribas, and CEF — entered into an agreement to increase the $110 million USD senior secured debt facility by $20,000,000 USD to $130,000,000 USD to support the expansion in production at the Ngungaju Plant in the Pilgangoora Project. The terms and conditions, including tenor, repayment schedule, financial covenants, and pricing (interest comprised of a fixed interest potion and a portion with LIBOR plus a fixed margin) remained substantially the same, although the security was expanded to include assets associated with Ngungaju. The maturity date remained unchanged at June 30, 2025. Pilbara was required to maintain a minimum liquidity position of $20,000,000 AUD at all times and comply with financial covenants each quarter beginning from the September 2022 quarter, namely maintaining a debt service cover ratio (DSCR) o f not less than 1.15:1, loan life cover ratio (LLCR) of not less than 1.25:1, and reserve tail ratio not less than 25%. Equity cure right were available for any default, and could be applied a maximum amount of three times over the loan, albeit not in consecutive quarters. Record ID#93871 captures ICBC's contribution to the up-sizing of the facility BNP Paribas also agreed to increase its working capital facility from $15 million USD to $25 million USD. The funds were drawn down in December 2021. During the 2022 fiscal year, Pilbara repaid $27,208,000 USD of the debt facility as a result of the cash sweep mechanism. In May 2022, the lenders agreed to formally waive the cash sweep mechanism for the remainder of 2022 The proceeds of the up-sized facility to be used to finance the staged restart of the Ngungaju Plant, and reimburse Pilbara for expenses already spent in service to that goal. Previously on January 20, 2021, Pilbara Minerals had purchased 100% of the shares in Altura Lithium Operations Pty Ltd. (ALO), the owner of the Altura Lithium Project, for $294.130 million AUD and renamed it to Ngungaju Lithium Operations Pty Ltd (NLO) and the project to the Ngungaju Plant Project. The Ngungaju Plant Project shared a common tenement boundary to Pilbara's Pilgangoora Lithium-Tantalum Project. The Ngungaju Plant, a fully-integrated open-pit mine and processing plant, began operations in 2018; it produced 181,00 wet tons of lithium in the 2020 fiscal year. Upon the acquisition, Pilbara sought to access reserves along the common tenement boundary where mining was previously limited and integrated the facilities. Soon thereafter, Pilbara evaluated Ngungaju's operations and how to best recommence operations. The board of Pilbara approved a staged restart of Ngungaju Plant late in the 2021 fiscal year, expecting operations would recommence in December quarter of 2021, with a rise in the annual productions to 200,000 dry metric tons by the middle of 2022 via an expansion of capacity, scale of operations, and production flexibility. The restart had a cost of projected cost of $39 million AUD. Wet commissioning at Ngungaju, and the first production of ore from the coarse production circuit, began on October 7, 2021, representing the first step of the plant's stage recommissioning. The first concentrate production from the Ngungaju Processing Plant was delivered on October 13, 2021. The production by the fines spodumene processing circuit was expected to commence production during the March Quarter 2022. By June 30, 2022, Pilbara Minerals had restarted, commissioned, and began increasing the coarse and flotation circuits of the Ngungaju Plant; the plant was expected to reach its name plant production capacity of 180,000 to 200,000 tons per annum during the September quarter of 2022. On February 22, 2023, Pilbara Minerals entered into a five-year $113 million USD secured debt facility with commercial lenders that refinance its existing senior debt facilities. It is unclear whether ICBC participated in this refinancing.