AVL Locks in US$10M Loan with 8%+SOFR Interest to Fund Vanadium Project

Strategic Funding Secured

Australian Vanadium Limited (ASX, AVL) has successfully arranged a US$10 million secured loan facility with its major shareholder, RCF Private Equity Fund I L.P., alongside Resource Capital Fund (Cardinal) L.P. This funding injection is a critical step in AVL’s medium-term capital strategy, providing the company with the financial flexibility to progress its Australian Vanadium Project towards construction readiness.

The loan facility, expected to be fully drawn down in October 2025 after customary conditions are met, carries an interest rate of 8% plus the 3-month term SOFR, payable quarterly. The 24-month term loan also includes a 4% establishment fee and a bullet repayment structure, with no amortisation until maturity.

Advancing Key Projects and Government Opportunities

AVL’s CEO, Graham Arvidson, highlighted that the loan will support the ongoing Optimised Feasibility Study and regulatory approvals for the Australian Vanadium Project, located at Gabanintha. Beyond the core mining operations, the funding will also underpin AVL’s downstream initiatives, including Project Lumina, which aims to vertically integrate vanadium processing and energy storage solutions.

Importantly, the loan facility positions AVL to actively participate in the Western Australian Government’s anticipated Expression of Interest for a 500MWh Vanadium Battery Energy Storage System (VBESS) in Kalgoorlie. This project represents a significant opportunity for AVL’s subsidiary, VSUN Energy, which specialises in vanadium flow battery technology and renewable energy storage.

Shareholder Alignment and Capital Strategy

The AVL Board, after a market sounding process and consultation with financial advisers, determined that the RCF loan proposal was the most favourable option considering availability, cost, and certainty. RCF’s status as a long-term supportive shareholder aligns interests closely with AVL’s success.

As part of the loan terms, AVL will issue 431.7 million unlisted options to RCF, representing 5% of the company’s current issued capital, exercisable at a 40% premium to the 30-day volume-weighted average price at the time of the loan agreement. These options have a five-year expiry, potentially diluting existing shareholders but also reflecting RCF’s confidence in AVL’s growth trajectory.

Outlook and Market Positioning

AVL’s Australian Vanadium Project remains one of the world’s most advanced vanadium developments, with a substantial mineral resource base. The company’s vertically integrated approach; from mining through to battery-grade vanadium products and energy storage solutions; positions it well to capitalize on growing demand for vanadium in steel and renewable energy sectors.

With this new funding, AVL is better equipped to navigate the complexities of project development and government tenders, while maintaining a minimum cash balance covenant to ensure operational liquidity. The next 12 to 24 months will be critical as AVL advances feasibility studies, regulatory approvals, and downstream commercialisation efforts.