Bezant Resources (AIM: BZT), a copper-gold exploration and development company, has drawn down in full a £4m loan from US lender YA II PN Ltd instead of placing new shares. The lender is managed by Yorkville Advisors Global, LP, and the company announced the facility today.
The loan is unsecured, non-convertible and repayable in cash, with interest at 5% a year. Bezant will repay it in ten equal monthly instalments of £400,000 plus accrued interest, the first due on the 15th of January and the last by the 15th of October next year.
It is not cheap money. A non-refundable 6% upfront fee and a £20,000 structuring and due diligence fee come out of the proceeds. That is £260,000 in fees, leaving about £3.74m before other costs.
Executive Chairman Colin Bird said the company chose debt to protect existing shareholders:
“We believe that raising £4 million gross through an immediate conventional equity placing, at a time when the cash-generating potential of our operations has yet to be fully recognised in the share price, would result in significant dilution for existing shareholders.”
Colin Bird, Executive Chairman, Bezant Resources
The company describes the loan as an alternative to a £4m placing at a discount to the current share price.
Dilution is not gone, though. Bezant has agreed to issue the lender three-year warrants, which are options to buy shares, with an aggregate subscription value of £3m at 0.16p a share. That is 125% of the five-trading-day volume-weighted average price before completion yesterday, implying an average of about 0.128p. The lender can pay in cash or offset the price against money owed under the loan.
The company expects to repay from projected cash flow, including exercise of in-the-money warrants. The loan terms also provide for an at-the-market facility, a way of selling new shares gradually, with an FCA-authorised broker within 15 business days.
Copper concentrate production is now underway at the Hope and Gorob project in Namibia, and the first shipment is anticipated in November. Bezant says the loan covers timing gaps between spending, shipments and sales receipts while commissioning completes.
Phase II is due to add copper production during 2027, and resource work aims to lift the Mineral Resource Estimate to support Phase III. The company targets at least 25,000 tonnes of contained copper a year. The test is whether November’s shipment brings cash in before the first £400,000 instalment falls due.