Metals One (MET1 ) has secured new funding of £4 million in the form of a promissory note issued to a fund managed by Yorkville Advisors Global LP.
The money will be used to support Metals One's minerals investment and development programmes and for general working capital.
The promissory note is not a convertible structure, meaning the loan principal does not itself convert into equity.
Metals One will, however, will issue warrants to the Yorkville fund equal to 100% of the value of the promissory note with a strike price equal to 130% of yesterday's closing share price, exercisable for three years.
Adding the funds from the promissory note to existing reserves takes Metals One’s total cash and liquid portfolio investment balance up to over £11 million.
It’s expected that repayments will be funded by the divestment of non-core portfolio investments. Metals One currently has an estimated £6 million in listed investments.
The facility is intended as bridging capital to fund near-term operational milestones across the company's project pipeline.
The promissory note carries interest at a rate of 7% per annum. A structuring and due diligence fee of £20,000, together with a commitment fee equal to 1% of the amount funded, will be withheld by the Yorkville fund from the proceeds.
Metals One will repay the principal in equal monthly instalments of 10% of the original principal amount, together with accrued and unpaid interest commencing 60 days after closing and continuing on each monthly anniversary until repaid in full.
Separately, Metals One has appointed Spark Advisory Partners its nominated adviser on Aim.
"This funding package provides Metals One with the committed cash capital to advance our core portfolio mining projects without the need for near term equity issuances at these depressed prices,” said Dan Maling, managing director of Metals One.
“Quite simply, this structure enables the company to leverage marketable value in its non-core portfolio to provide non-dilutive capital to advance its core opportunities wherein we believe material near-term value uplift potential resides. With £11 million in ready capital, we are in a strong position to accelerate our core gold acquisition, exploration and development opportunities.”
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The funding will clearly give Metals One additional ability to manoeuvre as it progresses with its transformational South African gold transactions, as well as with other projects. The loan is balanced by the value of existing assets inside the portfolio, and therefore carries limited downside risk. The opportunity, then, is on the upside.