(Sharecast News) - Minerals processing company Tri-Star Resources updated the market on the operations of Strategic & Precious Metals Processing (SPMP), the owner of an antimony-gold processing facility in the Port of Sohar Free Zone in Oman, on Monday.The AIM-traded firm has a 40% shareholding in the project, with the other joint venture partners being the Oman Investment Fund (OIF) at 40%, and DNR Industries - part of Dubai's Dutco Group - at 20%.It explained that the SPMP plant was the largest antimony roaster outside of China, and the world's first so-called "clean plant", designed to European Union environmental standards.Tri-Star said it had a targeted capacity to produce more than 50,000 ounces of gold and 20,000 tonnes in combined antimony metal and antimony trioxide (ATO) per year.The remedial works to resolve the technical issues it had indicated on 18 February were now largely complete - in particular, the installation of a new gas cooling solution and modifications to the electric furnace had been successfully tested, with a variety of calcine inputs.It said SPMP now expected to be able to move to the production phase of processing antimony and gold dore.As a result, the company said it looked forward to making further announcements in that regard over the coming months, as the ramp up commenced.It said it should be noted, however, that similar to all complicated engineering processes, there could be unforeseen issues that would need to be solved.On the subject of feedstock supply, Tri-Star said discussions were progressing in relation to the supply of the appropriate range and volumes of concentrate available to SPMP.It said it had undertaken discussions with a range of third parties, and was confident on sourcing all materials necessary to facilitate targeted production levels.For offtake agreements, the firm said that as the facility approached production, SPMP was committing additional resources to progressing such deals with a number of potential customers internationally.The SPMP board reportedly did not expect securing such offtake agreements to be problematic once the plant neared commercial production.Looking at financing, Tri-Star said that as had been previously announced, the delay of over a year in commencing metal production, together with the cost of remedial works, had increased SPMP's funding requirements.As a result, SPMP had appointed Hannam & Partners (H&P) to secure further debt funding for it.The SPMP board apparently considered that the most likely funding sources would be the regional banks and specialist debt investors, adding that it was not expected that Tri-Star would participate in the debt fundraising."It remains the intention, as noted in the announcement dated 20 March, that approximately $52m of SPMP's existing mezzanine loan - including accrued interest - will be converted into an interest free shareholder loan or equity on a pro-rata basis to OIF's, Tri-Star's and DNR's current shareholdings with the balance of approximately $15m remaining on existing terms," the board said in its statement."This is in addition to the $35m of shareholder mezzanine loans from OIF and DNR agreed in March."SPMP and Tristar continue to investigate how best to structure the conversion for the benefit of all stakeholders."Tri-Star said the SPMP shareholders remained committed to exploring seeking a listing of SPMP at the appropriate time following the move to commercial production, with further updates on that set to be made in due course.The company also said that, following the changes in the Tri-Star management announced in April, the board had started the search for an industry expert to assist in further solidifying the relationships of all three major equity holders in SPMP.Finally, on the costs front, the company said it remained conscious of costs, with recent changes to the management team having reduced those "significantly".Cost cutting was ongoing, with one of the board's main targets being to keep the overhead to a minimum, commensurate with the company's status as a holding company with a single minority investment.The board said that, while there were a number of challenges ahead, it believed that SPMP's long term prospects remained "good", with management identifying a number of opportunities to drive performance once commercial production was achieved."The successful plant modifications are highly encouraging with SPMP now able to focus on production of metal, ramp up and concluding appropriate supply and offtake agreements," said Tri-Star chairman Adrian Collins."Now that the production phase is nearing, we intend to move to a quarterly reporting schedule in order to provide a regular news flow to investors."
