The term sheet consists of a proposal for US$200 million to develop stage one of AKE’s Sal de Vida project.
AKE shares were up 3% in late Friday trade.
Year to date, AKE shares are up 30%.
Source: tradingview.com
Allkem’s US$200 million deal
On Friday, the lithium producer announced a new non-binding term sheet for a financial loan facility from the IFC.
The IFC is a member of the World Bank Group, an institution specialising in the private sector and emerging markets, and boasts a reach across 100 countries, committing $32.8 billion to companies in 2022 alone.
AKE has decided to use this proposed loan to develop stage one of its Sal de Vida project.
The US$200 million comes in the form of a debt package (which includes US$100 million for up to nine years) direct from the IFC — with the remaining funds to come from various commercial banks.
The fund’s structure included a diverse range of international lending groups as a syndicated loan agreement for the matching asset level and is expected to assist in de-risking the project’s capital structure.
It’s been based on present market conditions, specific facility type, size, duration, and location.
The IFC is globally recognised as setting performance benchmarks within environmental and social risk management, pertaining to eight specific performance standards: ‘Risk management, Labour, Resource Efficiency, Community, Land Resettlement, Biodiversity, Indigenous People and Cultural Heritage.’
AKE’s CEO, Martín Perez de Solay said:
‘We are already in a strong financial position to self-fund the Sal de Vida project however we saw an opportunity to further improve the financing structure for Sal de Vida and partner with IFC, an institution with decades of experience providing finance and sustainable business solutions in the mining space.
‘Sal de Vida is expected to generate significant economy-wide benefits that will improve the fiscal outlook, economic performance and social outcomes at national, regional and local community levels.’
What’s next for AKE?
The IFC has already carried out an environmental assessment, brine extraction checks, water use compliance, and mitigation plans.
Both a detailed risk analysis and technical assessment have been completed by senior consulting firms, and the project has now been approved for its scope, cost, and schedule.
Allkem now intends to complete the Environmental and Social Action Plan given by the IFC.
There are still a few boxes left to tick — such as finalising the terms of the facility and customary legal due diligence.
Allkem’s Board of Directors is also yet to give final approval, as are the IFC management and World Bank Board of Directors.
Once these details are taken care of, the facility is expected to conclude by the end of the year.
Lithium and EV adoption
In 2021, junior lithium stocks like Lake Resources [ASX:LKE] were some of the top performers on the All Ords.
Now, however, LKE is well down from its 52-week high.
While trading in lithium stocks is less exuberant in 2022, demand for the actual white metal remains strong.
So are any overlooked lithium stocks still out there?
Our latest research report on the lithium industry suggests yes.
Get a free rundown of three neglected Aussie lithium stocks worth checking out here.
Regards,
Kiryll Prakapenka,
For Money Morning
