What are the specific terms and covenants of the bridge loan agreement with Taurus Mining Finance?
Answer
The press release only confirms that Kabanga Nickel Limited has signed a $60 million bridge‑loan facility with Taurus Mining Finance Fund No. 2, L.P. The filing does not disclose the full set of loan terms or covenants, so the exact contractual language is not publicly available. What is known from the announcement is that the loan is a short‑term, senior‑secured facility intended to fund the next development‑phase of the Kabanga Nickel Project in north‑west Tanzania.
In the mining‑sector bridge‑loan market, a $60 million senior‑secured loan of this type typically includes the following standard elements (which can be expected to be present unless otherwise disclosed):
| Common Bridge‑Loan Feature | Typical Structure (industry norm) |
|---|---|
| Maturity | 12–24 months, with a possible extension subject to lender approval. |
| Interest Rate | Fixed or floating rate in the range of 6‑9 % p.a., often tied to LIBOR or USD SOFR + a spread. |
| Amortisation | Interest‑only payments during the term; principal due at maturity (bullet repayment). |
| Draw‑Down Schedule | Up‑front draw‑down of the full commitment or staged draws linked to project‑milestones. |
| Use‑of‑Proceeds Covenant | Funds may be used exclusively for the Kabanga project’s capital‑expenditure and working‑capital needs. |
| Financial Covenants | • Liquidity covenant – minimum cash‑balance or cash‑coverage ratio (e.g., ≥ 1.0). • Leverage covenant – debt‑to‑EBITDA or debt‑to‑project‑cash‑flow ceiling (typical 1.5‑2.0×). |
| Reporting Requirements | Quarterly financial statements, project‑progress reports, and compliance certificates to Taurus. |
| Event‑of‑Default Triggers | Failure to meet financial covenants, material adverse change in project status, or breach of use‑of‑proceeds restriction. |
| Security | First‑lien on the project’s assets and possibly a pledge over the project’s future offtake contracts. |
Trading implications
Because the bridge loan is senior‑secured and tied to a specific development milestone, the market will view it as a positive catalyst for Lifezone Metals (LZM)—it removes a near‑term financing gap and signals that the company can continue advancing Kabanga without diluting equity. Assuming the loan terms are in line with the industry norms above, the interest‑cost impact on cash‑flow will be modest, and the short‑term maturity means the company will need to secure longer‑term financing (e.g., a term loan or equity raise) before the bridge expires. Traders should monitor:
- Project‑milestone updates – any delay could trigger a covenant breach and increase credit‑risk concerns.
- Future financing announcements – a successful conversion to a longer‑dated loan or equity raise would likely lift LZM’s price, while a failure to refinance could pressure the stock.
In short, while the exact covenants have not been disclosed, the bridge‑loan’s size, senior‑secured nature, and project‑specific use‑of‑proceeds restriction are typical of mining‑sector bridge financing and should be viewed as a near‑term upside catalyst for LZM, provided the company stays on track with Kabanga’s development schedule.