Itafos, Toronto, has entered into a binding letter of intent (LOI) with majority shareholder CL Fertilizers Holding LLC (CLF) to raise US$36 million in capital through a non-brokered private placement financing of US$15 million and an amendment to increase the availability of a previously issued unsecured subordinated promissory note by US$21 million. The capital’s proceeds are expected to be used to fund general working capital and capital expenditure needs by Itafos and its subsidiaries.
In November, CLF committed to invest up to $36 million, if required, for Itafos to meet its liabilities as and when they become due to ensure business continuity and ongoing operations through Dec. 31, 2020 (GM Dec. 6, p. 1).
Under the LOI, CLF will subscribe for up to 38,076,923 shares in Itafos capital at an offering price of 52 cents a share in Canadian dollars on a non-brokered private placement basis, for aggregate gross proceeds of US$15 million (equivalent to about $19.8 million in Canadian dollars).
In addition, Itafos and CLF will amend the convertible unsecured and subordinated promissory note in favor of CLF that was issued by Itafos on Sept. 11 (GM Sept. 13, p. 27) to make the promissory note non-convertible and increase the availability by US$21million.
At closing, Itafos intends to borrow US$5 million of the available US$21 million, with the balance of US$16 million remaining available to be drawn by Itafos at its sole discretion through Dec. 31, 2020. An availability fee of 4 percent per year shall apply on undrawn amounts during the availability period, with such fee to be capitalized and added to principal on a quarterly basis.
In other news, Itafos has announced that mineral reserve estimates at its Rasmussen Valley and Lanes Creek phosphate mines in eastern Idaho – which supply its Conda fertilizer complex near Soda Springs – are expected to extend Conda’s mine life through mid-2026, or an additional 18 months to two years.
The mineral reserve estimates for the two mines in Caribou County total 14.4 million short tons (MST) at about 26.6 percent P205. The 14.4 MST include 12.2 MST at Rasmussen Valley, 0.8 MST at Lanes Creek, and 1. 4 MST stockpiled.
Itafos said in November the recent exploratory work supports the permitting process at the Husky1/North Dry Ridge project (GM Dec. 6, p. 1; Jan. 26, 2015) as the route to extend Itafos Conda’s mine life.