By David McKay
EFFORTS to get fertiliser minerals company Kropz back on the rails following a difficult three years took another step forward today after its majority shareholder, African Rainbow Capital (ARC), said it would provide the firm with a $40m convertible loan facility.
ARC, which has about 47% of Kropz shares, said the funds were required in order to commission first production from Elandsfontein, a phosphate project situated in South Africa’s Western Cape province.
The Elandsfontein project has been troubled almost from its beginning. It faced staunch opposition from environmental groups that persist to this day, and then missed its March 2017 start-up date as a result of technical problems in the process plant.
It sought to raise new capital through a listing in London in 2018, but raised about $15m less than expected. In February this year, Kropz CEO, Ian Harebottle, resigned from the company although he was originally hired to get Elandsfontein into production. Kropz CFO, Mark Summers, is interim CEO of Kropz.
ARC said today first commercial production from Elandsfontein was planned for the fourth quarter of 2021 having recently re-engineered the project’s processing plant. The re-engineering required “… additional equipment, infrastructure and modifications to the original plant are needed to cater for the requisite process modifications,” said ARC.
In order to bring the project into production, Kropz had agreed with third-party financiers and the ARC Fund to enter into the convertible loan facility up to a maximum of R680m. The repayment of the loan facility will be in the form of ordinary shares at a conversion price of 6.75 pence per share on a quarterly basis.
Shares in Kropz are currently trading at 9.9p/share, an increase on the day of about 16%. This compares to an all-time low of 6.8p/share in January.
On June 1, Kropz said it planned to raise $4m through the issue of shares. It raised $353,595 through an initial burst of 4.5 million shares issued at 6.75p/share with Summers and Kropz chairman, Robin Renwick, subscribing for the majority of shares.
Kropz said that the new placing and open offer will give qualifying shareholders the opportunity to subscribe for open offer shares at 6.75p each on the basis of nine open offer shares for every 50 existing shares. ARC Fund agreed to subscribe for 25.5 open offer shares, equal to around $2m.
Phosphate is one of several fertiliser minerals along with potash and Anglo American’s polyhalite project – among others – aimed at improving harvest efficiency. Demand growth for the minerals is strongly linked to world population growth.