How Andromeda Metals Secured A$75 Million to Power Great White Project
Andromeda Metals has achieved a key financing milestone with Merricks Capital's credit approval of a A$75 million debt facility, advancing the Great White Project towards final investment decision.
- A$75 million debt facility approved by Merricks Capital
- Facility includes principal, interest, fees, reserves, and cost overrun tranche
- 78-month tenor with 12-month grace period and 50% bullet repayment
- Equity warrants to Merricks Capital subject to shareholder approval
- Binding financing documentation underway, financial close pending
Financing Milestone Achieved
Andromeda Metals Limited (ASX – ADN) has secured credit approval from Merricks Capital for a substantial A$75 million debt facility aimed at supporting the development of its flagship Great White Project. This approval marks a significant step forward in the company’s efforts to bring the project closer to a final investment decision for its Stage 1A+ development phase.
Facility Structure and Terms
The debt facility encompasses not only the principal loan amount but also capitalised interest, fees, cash reserving requirements, and a cost overrun tranche, reflecting a comprehensive approach to project financing. The tenor of the facility is set at 78 months, featuring a 12-month grace period following project completion before scheduled amortisation begins. Notably, the repayment structure includes a 50% bullet payment at maturity, a common feature in project finance that balances cash flow flexibility with lender security.
Security and Covenants
As expected for a facility of this nature, Merricks Capital will receive a senior security package over the project’s assets and related entities, alongside customary financial covenants such as debt service cover ratios and minimum cash balances. These measures aim to safeguard both lender interests and project viability throughout the development and operational phases.
Equity Warrants and Funding Balance
In addition to the debt facility, Merricks Capital is set to receive 400 million equity warrants, exercisable at a 10% premium to future share issues related to the project’s development funding. This equity component, subject to shareholder approval, aligns the lender’s interests with the company’s long-term success. Meanwhile, Andromeda continues to pursue additional funding sources to complete the project’s capital structure, with due diligence ongoing with select capital providers.
Looking Ahead
With binding financing documentation now under negotiation, Andromeda and Merricks Capital are focused on achieving financial close, which remains contingent on customary conditions including securing the remaining equity funding. Acting CEO Sarah Clarke highlighted the credit approval as a strong endorsement of the project’s quality and the team’s dedication, underscoring the momentum building towards a final investment decision.
Bottom Line?
As Andromeda advances towards financial close, the market will watch closely for how remaining funding gaps are bridged and the Great White Project’s development timeline unfolds.
Questions in the middle?
- What are the timelines and prospects for securing the remaining equity funding?
- How will the 50% bullet repayment impact Andromeda’s cash flow post-project completion?
- What are the potential risks embedded in the financial covenants and security arrangements?
