bit from IRC update29 Jan 2019 13:56
CORPORATE UPDATE
Group’s Cashflow Position and Loans from ICBC and Petropavlovsk
In December 2018, the Company received a new bridge loan of c.US$27 million from a principal subsidiary of Petropavlovsk
PLC, the major shareholder of the Company and the guarantor of the ICBC loan. The loan was to finance the payment of the
December instalment of the ICBC loan, which was made within the required time frame.
The unaudited cash and deposit balance at the period ended 31 December 2018 was c.US$8 million. The total debt outstanding
was c.US$223 million as at 31 December 2018, including c.US$169 million due to ICBC and c.US$54 million due to
Petropavlovsk.
During 4Q2018, the Company obtained certain waivers from ICBC. They included a waiver from the obligation of the Group
to maintain the debt service reserve account of c.US$26 million and a waiver from obligations of K&S and Petropavlovsk PLC
to comply with certain financial covenants.
Loan facility agreement with Gazprombank
After a period of discussions with various parties, the Company signed a facility agreement for US$240 million with
Gazprombank to refinance the ICBC Facility. The principal repayments of the Gazprombank facility are skewed to the latter
part of the loan term so that the repayment pattern will better align with the ramping up of K&S and will assist the cashflow
position of the Group.
The Gazprombank facility is expected to be drawn down in the first quarter of 2019. The purpose of the Gazprombank facility is
to repay K&S’ outstanding principal indebtedness under the ICBC facility and to use the remaining amounts for the following
purpose: i) to repay the bridge loans advanced by Petropavlovsk in full; ii) to finance K&S’ working capital and iii) to repay
the guarantee fee owed by the Group to Petropavlovsk in respect of the ICBC Facility.
Amur/Heilongjiang River Bridge
The project to build a railway bridge across the Amur River border between Russia and China was first launched by IRC in
2006. The project was sold to Russian and Chinese development funds in November 2014. In early June 2016, the regional
government of the Jewish Autonomous Region announced that the Russian part of the Amur River Bridge would commence
construction. A contractor agreement has been signed which stipulates the terms and timing of the construction of the Russian
part of the Amur River Bridge.
The Russian side is at its final stage of construction while the Chinese side of the bridge is almost complete. According to
the media, the span between the fourth pier, belonging to Russia, and the fifth pier, belonging to China, has been successfully
joined. The construction of the bridge is expected to complete in mid-2019.
K&S Mine is situated approximately 240 kilometres from the bridge site and IRC’s nearest customer within China is
approximately 180 kilometres away from the bridge. Thus, IRC will benefit from the project with reduced transportation
distance and shipment time. T
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