RE:RE:RE:New Press Release - Pelham Investment Partners LP Files Advance Notice of Nominations for the Election of a New Board of Directors of Nickel 28 Capital Corp. at the Upcoming Annual General and Special Meeting of Shareholders@lumpy13
Ref. :
Annual Management’s Discussion & Analysis (page 6)
Joint Venture Debt
As part of the Joint Venture Agreement with MCC Ramu, MCC Ramu provided financing for construction and development of the Ramu Mine. This resulted in borrowing, on a non-recourse basis, to finance the original construction of the mine (“Construction Debt”) and borrowing an additional amount, on a non-recourse basis, to finance the ramp up and early operating expenses of the mine (“Operating Debt”). As part of the agreement, the Construction Debt and Operating Debt are to be repaid out of the Company’s share of the Ramu Mine’s operating surpluses (sales revenue less operating costs and ongoing capital expenditure).
Effective July 1, 2021, the Company fully repaid its non-recourse Operating Debt and related interest to MCC Ramu, which triggered a cashflow event for the Company. Now that the Operating Debt is repaid, the Company will receive a cash distribution of 35% of its attributable share of the operating surpluses, with the remaining 65% used to repay the remaining non-recourse Construction Debt and related interest. Furthermore, once the Company’s non-recourse Construction Debt is repaid, the Company’s participatory share of the Ramu Nickel Mine will automatically increase from 8.56% to 11.3% and the Company will begin receiving 100% of its share of operating surpluses on a monthly basis. Additionally, when the Company has repaid the Construction Debt, the Company will have the option to purchase an additional 9.25% interest in the Ramu Mine at market value, which if exercised would take the Company’s interest to 20.55%.
These borrowings represent the Company’s 8.56% share of principal repayments (capped to a specified development threshold of $2.1 billion) and interest repayments made by MCC Ramu to third party lenders on behalf of the Company, plus any accumulated interest charged by MCC Ramu. The amount classified as current represents that portion of the loan estimated to become repayable within 12 months. The borrowings, under the Construction Debt, bear an interest rate of 5.05% annually.