TSTR.L Regulatory News (TSTR)

Tri-Star Resources Plc - SPMP Operational Update

PR Newswire

London, June 24

24 June 2019

Tri-Star Resources plc("Tri-Star" or the "Company")

SPMP Operational Update

Tri-Star Resources plc (AIM: TSTR), the minerals processing company, is pleased to announce an update on the operations of Strategic & Precious Metals Processing LLC (“SPMP”), owner of an antimony-gold processing facility in the Port of Sohar Free Zone, located in the Sultanate of Oman. Tri-Star has a 40% shareholding in the Project with the other joint venture partners being The Oman Investment Fund (“OIF”) (40% equity holder) and DNR Industries Limited, part of Dutco Group in Dubai (20% equity holder). 

Processing

The SPMP plant is the largest antimony roaster outside of China and the world’s first ‘Clean Plant’, designed to EU environmental standards. It has a targeted capacity to produce in excess of 50,000 oz. of gold and 20,000 tonnes in combined antimony metal and antimony trioxide (“ATO”) per annum. 

The remedial works to resolve the technical issues announced on 18 February 2019 are largely completed, in particular, the installation of a new gas cooling solution and modifications to the electric furnace have been successfully tested with a variety of calcine inputs. SPMP now expects to be able to move to the production phase of processing antimony and gold dore.

Accordingly, the Company looks forward to making further announcements in this regard over the coming months as ramp up commences. It should be noted, however, that similar to all complicated engineering processes, there may be unforeseen issues that will need to be solved.

Feedstock supply

Discussions are progressing in relation to the supply of the appropriate range and volumes of concentrate available to SPMP. The Company has had discussions with a range of third parties and is confident on sourcing all materials necessary to facilitate targeted production levels. 

Offtake agreements

As the facility approaches production, SPMP is committing additional resources to progressing offtake agreements with a number of potential customers internationally. The SPMP Board does not expect securing such offtake agreements to be problematic once the plant nears commercial production.

Financing

As previously announced, the delay of over a year in commencing metal production together with the cost of remedial works, has increased SPMP’s funding requirements. Accordingly, SPMP has appointed Hannam & Partners (“H&P) to secure further debt funding for SPMP. It is considered by the SPMP board that the most likely funding sources will be the regional banks and specialist debt investors. It is not expected that Tri-Star will participate in the debt fund raising. 

It remains the intention, as noted in the announcement dated 20 March 2019, that approximately US$52 million of SPMP’s existing Mezzanine Loan (including accrued interest) will be converted into an interest free shareholder loan and/or equity on a pro-rata basis to OIF’s, Tri-Star’s and DNR’s current shareholdings with the balance of approximately US$15 million remaining on existing terms. 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.

The SPMP shareholders remain committed to exploring seeking a listing of SPMP at the appropriate time following the move to commercial production and further updates on this will be made in due course. 

Management

Following the changes in the Tri-Star management announced in April 2019, the Board has commenced the search for an industry expert to assist in further solidifying the relationships of all three major equity holders in SPMP. Further announcements will be made as and when such an individual has been appointed.

Costs

The Company remains conscious of costs and recent changes to the management team have reduced these significantly. Cost cutting is on-going 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. 

Whilst there are a number of challenges ahead, the Board believes that SPMP’s long term prospects remain good with SPMP management identifying a number of opportunities to drive performance once commercial production has been achieved.

Adrian Collins, Chairman of Tri-Star commented:

“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. 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.”

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.

**ENDS**

For further information please visit www.tri-starresources.com or contact:

Tri-Star Resources plcDavid Facey, CEO/ CFO Tel: +44 (0)20 7920 3150

Tavistock Communications Ltd Tel: +44 (0) 20 7920 3150Charles Vivian Mobile: +44 (0) 7977297903

Gareth Tredway Mobile: +44 (0) 7785974264

SP Angel Corporate Finance (Nominated Adviser)Robert Wooldridge/Jeff Keating Tel: +44 (0)20 3470 0470

finnCap Ltd (Broker)Scott Mathieson/Camille Gochez Tel: +44 (0)20 7220 0500

Notes to Editors:

Tri-Star’s principal interest is in an antimony and gold production facility (the “SPMP Project”).

The SPMP Project is based in Sohar, Sultanate of Oman, and is being developed by Strategic & Precious Metals Processing LLC (“SPMP”), an Omani company in which Tri-Star has a 40% equity interest. Tri-Star also has antimony exploration licenses in Canada which are held for their potential contribution of feedstock to the SPMP Project.