14/09/2020 - 10:42

BCI Minerals raising $48m

14/09/2020 - 10:42

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Kerry Stokes-backed BCI Minerals has announced an underwritten entitlement offer to fund early construction works on its $780 million Mardie salt and potash project.

BCI Minerals raising $48m
Alwyn Vorster says BCI is pleased with the level of support from existing shareholders.

Kerry Stokes-backed BCI Minerals has announced an underwritten entitlement offer to fund early construction works on its $780 million Mardie salt and potash project.

BCI said the funds raised would allow it to proceed with early construction works, such as the trial pond, seawater pump station, major roads, accommodation village and power supply.

It will also order long lead items such as pumps.

Managing director Alwyn Vorster said this meant required infrastructure would be in place prior to full project construction starting in the second quarter of 2021.

This is subject to final environmental approvals and a final investment decision.

Mr Vorster said the early works would also help to derisk the project, which would initially focus on salt production before moving into the more technically challenging sulphate of potash.

The $48 million entitlement offer has been priced at 24 cents per share, an 8 per cent discount to the 15-day average weighted price.

The offer is fully underwritten by joint lead managers Bell Potter Securities and Canaccord Genuity.

Mr Stokes’ Wroxby Pty Ltd, which has a 29 per cent stake in BCI, has agreed to take up its full entitlement and provide sub-underwriting for up to 70 per cent of any shortfall.

In addition, Sydney-based Ryder Capital, which holds a 4 per cent stake, will take up its full entitlement and sub-underwrite up to 28 per cent of any shortfall.

The joint lead managers have agreed to pay their 3.5 per cent underwriting fee to the sub-underwriters in respect of the relevant number of shares.

Mr Vorster said BCI was pleased with the level of support from existing shareholders, providing further confidence for the larger funding task ahead for BCI in 2021.

BCI has already invested $20 million completing a bankable feasibility study on the Mardie project, located on the Pilbara coast south of Karratha.

The study estimated the project will cost $779 million to develop.

BCI aims to export 4.4 million tonnes per annum of salt and 120,000tpa of sulphate of potash via a new trans-shipment port known as Cape Preston West.

Mr Vorster said BCI was more advanced on project planning and gaining approvals than two other big salt projects planned for Western Australia’s north.

Private company Leichhardt Industrials plans to invest an estimated $280 million on its Eramurra Salt project, which will produce 2.4mtpa of salt.

German company K+S Group’s Ashburton Salt project has an estimated cost of $350 million and aims to produce 4.5mtpa of salt.

All three projects are aiming to fill the expected supply shortfall for industrial salt in the mid 2020s.

Separately, several ASX-listed companies including Kalium Lakes, Australian Potash and Salt Lake Potash are pursuing the development of sulphate of potash projects based on inland lake brines.

Sulphate of potash is used as an agriculture fertiliser.

The technical complexity of SOP projects became apparent in May when Kalium Lakes announced cost increases on its project, which is still under construction.

Salt Lake Potash announced today construction of its Lake Way project near Wiluna was 60 per cent complete.

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