24 Jul 2017 07:00
Certain information contained in this announcement would have been deemed inside information for the purposes of Article 7 of Regulation (EU) No. 596/2014 until the release of this announcement
24 July 2017
Tri-Star Resources plc
("Tri-Star" or the "Company")
Oman Antimony Roaster - Capital Budget Update
Tri-Star announces further progress by Strategic & Precious Metals Processing LLC ("SPMP") in developing the Oman Antimony Roaster project ("OAR"). The OAR is located in Sohar, Sultanate of Oman. Tri-Star has a 40% equity interest in SPMP.
Since the Company's update reported in the circular to shareholders dated 1 June 2017, process test-work has now been largely concluded, with work now focusing primarily on operational readiness. Consequential final plant modifications have moved forecast plant commissioning, as expected, into Q1 2018. Importantly, SPMP's negotiations with Traxys Europe SA ("Traxys") were concluded on schedule and, as announced by Tri-Star on 13 June 2017, SPMP has signed a multi-year feedstock supply contract with Traxys.
Moreover, SPMP has achieved process design freeze for the overall project which has enabled a more definitive appraisal of the costs to complete to be undertaken. As such, and further to the matters described above, SPMP has formally approved an increase in the capital budget for the construction of OAR to $96.0 million, plus a contingency that can be approved by the Board of SPMP on a case by case basis.
The bulk of the increase in the capital budget results from design changes. Specifically:
- increasing the capability of the plant to accept a wider range of feedstock such as direct shipping ores, of which there is a large global network of small scale operators currently poorly served with sustainable off-taker demand;
- expansion of the downstream gold treatment and associated gas handling which will allow the OAR to bring in non-conventional feed sources of high gold content directly for gold recovery, thereby increasing gold output viability without compromising the antimony concentrate process route; and
- thirdly, subsequent to test-work, altering the design and materials for construction of the gold furnaces to protect the equipment from the highly corrosive behaviour of antimony on linings, therefore improving plant life, equipment performance and most importantly the quality of the gold to be produced.
SPMP's existing committed financing facilities amount to $70 million, comprising senior debt of $40 million from Bank Nizwa and shareholder loans and equity of a further $30 million. As a result of the now confirmed revised capital budget, SPMP is working closely with its stakeholders (both prospective lenders and existing shareholders) to increase the size of these facilities to accommodate the increased capital cost, the associated contingency, and SPMP's working capital requirements through to cash flow positive operations. Tri-Star expects SPMP to be in a position to start paying dividends to shareholders within three years of commencement of commercial operations in Q1 2018.
As already advised in the circular to shareholders dated 1 June 2017, the Tri-Star expects to be invited to participate in this further round of financing in order to maintain its 40% interest in the project. Further announcements regarding the financing will be made by the Company in due course.
References in this announcement to $ mean United States Dollars.
Enquiries:
Tri-Star Resources plc Tel: +44 (0) 20 3470 0470
Guy Eastaugh, Chief Executive Officer
SP Angel Corporate Finance (Nomad and Broker) Tel: +44 (0) 20 3470 0470
Robert Wooldridge / Jeff Keating
Yellow Jersey PR Limited (Media Relations) Tel: +44 (0) 776 932 5254
Felicity Winkles / Joe Burgess