The Saudi National Titanium Dioxide Company Ltd. (Cristal) has reached an agreement with Australia’s BeMaX Resources for the funding of the acquisition of Probo Mining Ltd. This support will enable BeMaX to gain full ownership of its Pooncarie Mineral Sands Project (MSP) project. The $30 million deal also includes underwriting support for project financing and a major product offtake arrangement.
Cristal will provide cash funding of $10 million on the basis of a convertible note issue. The funds raised from the issue will finance BeMaX's first cash installment in the acquisition of Sons of Gwalia Ltd (SGW)’s 25 percent interest in the $200 million Pooncarie MSP, which incorporates Ginkgo and Snapper deposits
Conversion of this note would be subject to shareholder approval and the attainment of acceptable firm commitments for project financing. The deal will also underpin a major equity raising in early 2003 for the remainder of the funding package for the Project.
Cristal will also provide up to $20 million in underwriting support for the $60 million to $70 million equity fund raising BeMax will need to get away in support of Pooncarie's project financing package. The Saudi group has been granted a first right of refusal on underwriting an additional amount (its actual entitlement is $15 million) subject to it not moving to more than 49.9 percent of BeMax's issued capital.
In addition, Cristal has agreed to enter into an off-take agreement, which will cover a significant portion of the planned annual rutile output from Pooncarie. In addition, the Saudi group is to buy most of the rutile produced by the project. The other key products (ilmenite and leucoxene) are already covered in an offtake agreement with another pigment producer.
BeMaX plans to have project financing in place by March next year. That would allow the project to be built and commissioned by the second half of 2004, with first product to market in early 2005.
Cristal, a privately owned Saudi Arabian company, operates a titanium dioxide pigment facility at Yanbu on the Red Sea. The company has been in operation for ten years. It is the only producer of titanium pigment in the Middle East region with capacity, following recent expansion, to produce in excess of 90,000 tons per annum of pigment. They also have global sales into over 50 countries.
The major shareholders consist of equal shareholding between Shairco Limited, Gulf Investment Corporation (GIC) and National Industrialization Co. Shairco is a prominent family owned industrial developer/manufacturer. GIC is owned by the six Gulf States comprising the Gulf Cooperation Council (GCC) and a major ceramic and industrial developer in three countries. NIC is a listed Saudi Arabian industrial company. — (menareport.com)
© 2002 Mena Report (www.menareport.com)
