Tharisa has extended its US$50 million bond issue for Karo Mining, saying it needed to mop up “strong interest” from potential investors. A regulatory holdup may also be standing in the way.
The company issued the bond on VFEX on October 31 to raise part of the US$391 million that it needs to build Zimbabwe’s newest platinum mine, at Selous. The bond issue was to close on Wednesday, but it will now close next Friday, December 9.
“The issuer has received strong interest in the bond with certain institutions in the final internal approval processes for participation, and to accommodate these potential investors, and to ensure administrative processes are completed, the offer window for the application of notes in the bond has been extended,” Tharisa said in a notice.
Under the bond issue, an investor can buy a minimum of US$2,500. In return, the investor gets 9.5% interest, paid out twice a year. Karo is hoping to raise a minimum of US$25 million. Arxo Finance, a Tharisa subsidiary, has committed to subscribe for US$10 million of the bond.
The company has targeted pension funds, but there are delays in having the bond granted prescribed asset status that would make it more attractive to institutional investors.
“All submissions to Zimbabwe’s Insurance and Pensions Commission relating to the bond being conferred ‘prescribed asset status’ have been lodged. However, the regulatory approval is still awaited,” the company says.
Karo breaks ground at the site next Wednesday, finally beginning development after delays caused partly by COVID-19. Production is expected in July 2024.
Initially, Karo had planned to spend US$250 million on a 150,000 ounces per year mine, on a life-of-mine of 20 years. This has now gone up to 194,000 ounces annually, to be mined over 17 years. A sharp rise in steel and transportation costs and the inclusion of a US$45 million contingency have lifted the capital cost to US$391 million.
Apart from the US$50 million bond, Karo will also raise US$260 million in project finance and US$130 million by leveraging the company’s assets.