Tri-Star Resources Plc - SPMP Funding and Operational Update

Tri-Star Resources Plc - SPMP Funding and Operational Update

PR Newswire

London, March 20

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

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

SPMP Funding and Operational Update

20 March 2019

Tri-Star (AIM: TSTR), the mining and minerals processing company, is pleased to announce an update on the funding structure and operations of Strategic & Precious Metals Processing LLC ("SPMP"), owner of an antimony-gold processing facility in Oman in which the Company has a 40%-shareholding.

Following discussions between the shareholders in the project, a significant funding solution has been agreed primarily to cover short term working capital and capital expenditure requirements as the SPMP facility nears first revenue and a longer-term financing solution is finalised. As part of this agreement, Tri-Star will maintain its 40% shareholding in SPMP and is not required to inject any new funds into the project.

In addition, the shareholders of SPMP have agreed to explore a stock exchange listing of SPMP and a full range of liquidity and funding options.

Funding update

Under the agreement entered into between SPMP and Tri-Star together with the Oman Investment Fund Holding Company LLC ("OIF") and DNR Industries Ltd ("DNR"), 40% and 20% shareholders in SPMP respectively (the "Agreement"), OIF and DNR have agreed to provide funding to SPMP in the form of a new mezzanine loan (the "New Mezzanine Loan") of US$35 million on terms substantially similar to SPMP's existing Mezzanine Loan with the following principal exceptions:

• the New Mezzanine Loan will be repaid in priority to the existing Mezzanine Loan and any other unsecured indebtedness;
  
• the New Mezzanine Loan will not be convertible into equity of SPMP;
  
• SPMP may pre-pay all or any of the New Mezzanine Loans at any time without penalty;
  
• the New Mezzanine Loan will bear interest at 20% per annum, payable semi-annually; and
  
• Tri-Star has the option but not the obligation to participate in the New Mezzanine Loan up to its 40% pro rata interest.

No new equity will be issued as part of the New Mezzanine Loan arrangements and the shareholders' equity interests in SPMP will remain OIF 40%, Tri-Star 40% and DNR 20%.

As part of the Agreement, it is intended that approximately US$52 million of the 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. The US$15 million balance of the existing Mezzanine Loan will remain on existing terms.

Under the Agreement, OIF, Tri-Star and DNR have agreed to explore seeking a listing of SPMP, provisionally to take place once commercial production has been achieved. Further updates on this will be made in due course. SPMP is also in discussions with various banks on refinancing options for the SPMP project.

Karen O'Mahony, Acting Chief Executive Officer of Tri-Star, commented:

"I am pleased to announce this positive financial restructuring. The SPMP shareholders have been working hard to achieve a funding solution that not only meets the short-term financial requirements highlighted in our announcement of 14 January 2019, but also confirms to external funding institutions the shareholders' commitment to this world-class, technologically-advanced project.

Once again, I'd like to thank the government of Oman for its continued support as we get nearer to the point of adding a significant industrial asset to the country's economy.

The prospective listing of SPMP in its entirety has always made sense. SPMP will now be appointing independent advisors to look at listing feasibility, together with the optimal structure and timing for the company and its shareholders.

Meanwhile, on the ground, the management team continues to work to solve the issues that are holding back first production at the plant to ensure that it takes its place as a globally significant beneficiation facility for years to come."

Operational Update

Unrefined antimony metal has been produced from intermediate products (crude antimony trioxide and impure antimony trioxide) in the pilot furnace which is proof of the process chemistry. It was noted that the chemical composition of the antimony metal had a 97.3% purity in its unrefined form. However, as previously disclosed, SPMP continue to have teething problems with the plant - this is not unusual as production ramp up generally presents some issues.

Steven Din, CEO of SPMP, commented:

"During the commissioning of the antimony production plant in Sohar, several engineering design issues have been identified. SPMP is working with the project manager, Worley Parsons, to remediate these.

I am confident that this is a unique processing facility that will command a dominant position on the global stage for antimony production."

ENDS

Enquiries:

Tri-Star Resources plc
Karen O'Mahony, Acting CEO/ CFO Tel: [phone]

Tavistock Communications Ltd
Charles Vivian/ Gareth Tredway Tel [phone]

SP Angel Corporate Finance (Nominated Adviser)
Robert Wooldridge/ Jeff Keating/Caroline Rowe Tel: [phone]

FinnCap Ltd (Broker)
Christopher Raggett/Scott Morrison/Camille Gochez Tel: [phone]

Notes to the Editor

Tri-Stars principal activities are in an antimony and gold production facility (the "SPMP Project" or the "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 is held for its potential contribution of feedstock to the SPMP Project.