Zinc producer New Century Resources (ASX: NCZ) has announced the successful refinancing of the environmental bond at its Century mine in Queensland.
In late October, the company revealed it had entered into a binding terms sheet for an environmental bond facility with Argonaut Insurance Company and Macquarie Bank to replace the existing environmental bond at the mine held via MMG Limited.
New Century today confirmed the long form documentation for the new facility has been executed and financial close has occurred.
Under the terms of the previous bond with MMG, New Century was to progressively replace the environmental bond held with the Queensland Government with 40% of generated earnings before interest, tax, depreciation and amortisation (EBITDA).
New Century said the new bond facility “removes the effective cash lock-box mechanism, unlocking up to $100 million in short-term cash flow and providing greater financial flexibility for the company”.
Completion of the new bond also marks the conclusion of the company’s relationship with MMG, which began with the acquisition of the Century mine in 2017.
New Century has now declared itself “debt free”, except for its minor long dated rolling offtake prepayment arrangements, which stood at $4.6 million as at 30 September 2021.
Replaced bond was part of ESG-focused growth strategy
In October, New Century announced a transformational growth strategy towards an environmental, social and governance (ESG) focus.
This involved entering a strategic partnership with global precious metals miner Sibanye-Stillwater to pursue a tailings asset management and economic rehabilitation.
In addition to the replacement of the existing environmental bond, implementation of the company’s growth strategy has included: a binding term sheet for a two-year option to acquire the Mt Lyell copper mine in Tasmania; a strategic investment by Sibanye-Stillwater for a 19.99% fully-escrowed position in New Century; and retirement of the existing senior secured debt with Värde Partners.
In the chairman’s address to shareholders at New Century’s annual general meeting this week, Rob McDonald said the replacement of the bond was part of its material transaction with Sibanye-Stillwater.
“The new bonding arrangements provide us with significant flexibility with the management of cash being generated by Century’s ongoing operations,” he said.
“I thank MMG for entrusting us with the stewardship of the Century mine and the economic rehabilitation project, and for their support during the company’s formative years,” Mr McDonald added.