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Wolf Minerals Ltd (WLFE)


Thursday 01 March, 2018

Wolf Minerals Ltd

Debt Restructure and Additional Funding

RNS Number : 3200G
Wolf Minerals Limited
01 March 2018

1 March 2018                                                       

Wolf Minerals Limited

Senior Debt Restructure and Additional £10 Million Funding

Specialty metals producer, Wolf Minerals (ASX: WLF, AIM: WLFE) (Wolf or the Company) is pleased to provide an update on the Company's financing arrangements to support short term working capital and complete the operational ramp up at the Drakelands open pit mine (Drakelands).


ü Existing Bridge Facility increased from £55 million to £65 million.

ü Standstill period extended with limited events of default.

ü Senior Debt principal repayments reduced for the next three quarters.

ü Financing arrangements to support Wolf in achieving long term self-sustaining cash flows.

The encouraging improvements in the operating performance at Drakelands have enabled Wolf to work with its key project stakeholders to develop financing arrangements that can support the Company in achieving long term self-sustaining cash flows. As a result, Wolf has executed binding agreements with:

•      Its existing senior lenders (Senior Lenders) for an extension to the standstill period and further restructure of the senior debt currently outstanding (Senior Debt Restructure);

•      Resource Capital Fund VI L.P. (RCF VI) to provide an additional £10 million, secured subordinated loan under the existing bridge loan facility (Bridge Facility), with the potential for this to be increased to £15 million at the discretion of RCF VI; and

•      Its existing offtakers, Global Tungsten & Powders Corp (GTP) and Wolfram Bergbau und Hütten AG (WBH), to align with the extended standstill period.

Commenting on the financing arrangements, Wolf's interim Managing Director, Richard Lucas said:

"We anticipate 2018 being a transformative year for Wolf, where it reaches design performance and pursues further opportunities to build shareholder value. These financing arrangements provide a platform to achieve those goals. The operational ramp up at Drakelands is progressing towards completion and, with strong tungsten market conditions, should deliver long term self-sustaining cash flows.

We recognise the significant contribution from each of our key project stakeholders to date in supporting these achievements and sharing Wolf's vision of a world class tungsten and tin operation in the UK."

Bridge Facility

The additional funding under the Bridge Facility is being provided on the same terms as the subordinated loan announced on 27 October 2017, including that it will be fully secured.

The Bridge Facility (and hence the subordinated loan and convertible loan) matures in October 2020 when they are repayable in full.  Under the Bridge Facility the Company has also given RCF VI certain warranties and indemnities and RCF VI has certain limited rights of termination.

Terms of the subordinated loan

The subordinated loan interest rate of 15% p.a. is payable quarterly in arrears in either cash or shares at the Company's choice, (assuming the required shareholder consents are obtained to issue sufficient new shares) issued at the prevailing 20 day volume weighted price per Wolf share.

Terms of the convertible loan

The convertible loan interest rate of 10% p.a. is payable quarterly in arrears in either cash or shares at the Company's choice, issued at the prevailing 20 day volume weighted average price per Wolf share.

Following completion of certain conditions precedent, the Company anticipates receiving the additional £10 million of funding in two tranches of £5 million, with the first tranche being received by the end of February and the second tranche in April 2018. The potential further £5 million (taking the Bridge Facility increase to £15 million) will be advanced at the discretion of RCF VI.

Pursuant to its terms, the Bridge Facility mandatorily switched to a subordinated loan on 21 October 2017 and the new funds shall therefore be provided in the form of an additional subordinated loan.

If certain conditions precedent are satisfied (including shareholder approval and RCF VI obtaining FIRB approval), RCF VI can elect that the subordinated loans switch to subordinated convertible notes.  The Company will, in due course, seek shareholder approval to enable the entire Bridge Facility to switch to convertible notes.

The additional funding will increase the subordinated loan announced on 27 October 2017 to a total of £20 million (and the potential to increase to a total of £25 million at the discretion of RCF VI).  If converted to the convertible loan, it will have a minimum conversion price of the lesser of A$0.055 per share and the price of any subsequent equity issued as part of any broader recapitalisation transaction. The minimum conversion price of the original subordinated loan of £45 million provided under the Bridge Facility was set at the lesser of A$0.09 per share and the price of any subsequent equity issued as part of any broader recapitalisation transaction.

The Company shall pay to RCF VI a facility fee of 2% which may be capitalised at RCF VI's election.  All other terms of the Bridge Facility, the subordinated loans and the potential subordinated convertible notes are as described in the Company's announcements of 24 October 2016, 28 June 2017 and 27 October 2017.

Debt Restructure

The Company currently has £64 million outstanding under its debt facilities with the Senior Lenders (Senior Debt).

As announced on 30 January 2018, the Company's funding and offtake standstill arrangements from the debt restructure in October 2016 are due to end on 28 February 2018 and revert to the original terms as announced on 24 October 2016. This includes the re-commencement of principal debt repayments, with a repayment of £1 million due on 28 February 2018.

As part of funding negotiations, the Senior Lenders and RCF VI have agreed to extend the standstill period of certain loan agreement conditions until 31 January 2019. The standstill provides that a limited number of events of default shall apply under the Senior Debt and Bridge Facility and grants relief from financial and other covenants. Further, relief has been provided for financial ratios to be disapplied until 30 September 2019.

The terms of the Senior Debt Restructure provide that the Senior Debt principal repayments will be reduced to £1 million per quarter due on 30 April 2018, 31 July 2018 and 31 October 2018 before reverting to the current principal repayment schedule from 31 January 2019. The total deferred amount of £3.3 million has been added to the principal repayments due in 2020. In addition, the current principal repayment schedule is to be reviewed by 31 July 2019, with a view to Wolf and the Senior Lenders agreeing a resculpted repayment schedule within the existing June 2023 tenor of the Senior Debt.

A portion of the Company's Senior Debt is supported by guarantees provided by the German government's Untied Loan Guarantee Scheme (Ungebundene Finanzkreditdeckung - UFK), and Wolf's tungsten concentrate customers GTP and WBH (together Guarantors). The Guarantors have consented to the Senior Debt Restructure.

In addition, the Company's supply agreements with GTP and WBH have been amended to align with the extended standstill period under the Senior Debt and Bridge Facility.

Related Party Transaction

RCF VI is deemed to be a Related Party as defined in the AIM Rules as it is considered to be an associate of Resource Capital Fund V L.P. (RCF V) and RCF V Annex Fund (Annex Fund). RCF V, Annex Fund and RCF VI currently hold in aggregate 609,704,057 shares, which equates to a relevant interest of approximately 56.0%1. As a result, entering into the amended Bridge Facility is deemed to be a related party transaction under the AIM Rules.

The Company's Board of Directors (excluding Mr Chris Corbett, who is an employee of an entity which is an associate of RCF VI and RCF V) consider, having consulted with the Company's nominated adviser, that the terms of the transaction are fair and reasonable insofar as its shareholders are concerned.



For further details, please contact:

Numis Securities: John Prior/James Black/Paul Gillam  +44(0) 20 7260 1000

Newgate:  Adam Lloyd / Ed Treadwell   +44 (0) 20 7653 9850

Wolf Minerals Limited: Richard Lucas    + 44 (0) 17 5239 3235




About Wolf Minerals

Wolf Minerals is a dual listed (ASX: WLF, AIM: WLFE) specialty metals producer. In 2015, Wolf Minerals completed the development of a large tungsten resource at its Drakelands Mine, located at Hemerdon, in southwest England.



1 Total Fully Paid Outstanding Shares 1,088,696,830 as per Appendix 3B, 27 December 2017  

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