Companies

Kwale titanium miner repays Sh5.4 billion Covid-19 loan

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A titanium mining site in Kwale County. PHOTO | KEVIN ODIT

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Summary

  • The firm says in latest trading update the repayment is part of the Sh8.2 billion ($75 million) that it drew when Covid-19 disruptions were gathering pace in its markets operations such as Kenya.
  • The Australian-based miner says the decision to repay a loan at a time when the infectious virus is still spreading its two markets of operation — Kenya and Madagascar was based on its risk assessment.

Kwale miner Base Resources has repaid Sh5.4 billion ($50 million) as part of the loan taken in the first quarter of the year to boost its liquidity position in the wake of coronavirus pandemic.

The firm says in latest trading update the repayment is part of the Sh8.2 billion ($75 million) that it drew when Covid-19 disruptions were gathering pace in its markets operations such as Kenya.

The Australian-based miner says the decision to repay a loan at a time when the infectious virus is still spreading its two markets of operation — Kenya and Madagascar was based on its risk assessment.

“With greater clarity on the risks and impacts of the Covid-19 pandemic, the company repaid $50 million of the $75 million revolving credit facility (RCF) drawn down earlier in 2020 to enhance liquidity and provide flexibility at the start of the pandemic,” said the firm.

An RCF is a line of credit that is arranged between a bank and a business to ensure that a business has access to the funds at any time when needed. It is usually considered as short-term financing.

The $75 million facility had no mandatory repayment until June next year, meaning that Base has over eight months to repay the remaining sum.

As at end of February, the firm had cash and cash equivalents of Sh12.3 billion ($112.8 million) at the end of September, being three times the Sh4 billion ($37.7 million) it had at the end of February.

The firm, which mines titanium mineral in Kwale County, however maintains that a halt to or curtailment of operations at some point in the future remains a possibility given the current trend of infections.

The management had in March said its operations have continued uninterrupted but with broad health and safety procedures.

During three months to September 2020, mining of the three minerals — Ilmenite, rutile and zircon— dropped by 22.4 percent, 18.5 per cent and 20.9 per cent respectively.