9th Aug 2022 11:07
(Alliance News) - Kropz PLC shares plummeted on Tuesday as it reported further delays in the ramp-up of operations at Kropz Elandsfontein (Pty) Ltd.
Shares in the African phosphate producer and developer were down 34% to 5.00 pence each in London on Tuesday mid-morning.
Kropz said that the most recent delay at its Elandsfontein project has been largely driven by initial ore variability in the current mining area.
"Mining rates and associated delivery of ore to the plant have been compromised due to the presence of competent banks of hard material within the orebody, that were previously unknown. This hard material cannot be mined using free-digging methods and so new equipment has been brought to site to test mechanical breakage of the material and alternative mining methods are being identified. In order to assess the impact of this hard material on the future mine plan, further drilling is currently in progress," the company explained
Kropz said that the delay will result in an immediate, additional funding requirement of ZAR70 million, around USD4.2 million. In order to cover part of this, Kropz will draw down the remaining ZAR13.5 million, around USD800,000, of a ZAR177 million conditional convertible equity facility with major shareholder ARC Fund.
Additionally, Kropz said it has agreed a ZAR121.5 million, around USD7.3 million, bridge loan facility with ARC to meet immediate cash requirements at Elandsfontein to the end of August. On Tuesday, Kropz drew down ZAR60 million, around USD3.6 million, of the loan.
The loan is unsecured, repayable on demand, and there are no fixed repayment terms. Interest is payable on the loan at the South African prime overdraft interest rate plus 6%, nominal per annum and compounded monthly.
"Due to the delay in production ramp-up, Kropz is exploring further funding options with ARC to fund any additional working capital requirements for Elandsfontein through to positive cash flow," Kropz added.
By Sophie Rose; [email protected]
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