Sydney-based private equity manager Pacific Road Capital Management has agreed to invest up to $26 million in Albidon, a mineral exploration and development company, the company said.
Established in 2000 and based in Perth, Albidon’s development activities have been focused on the Munali Nickel Project in Zambia, where nickel concentrates were first produced in mid 2008.
The funding takes the form of five year, zero coupon loan notes with attaching warrants, in three tranches. It is only to be used for working capital and ramp-up costs at the Munali Nickel Project.
The first tranche funding of $6 million in February 2009 is conditional upon Albidon raising an additional $5 million from other investors. The company must also renegotiate debt repayment terms with its lenders and agree to costs and productivity targets with the Munali Nickel Project’s mining contractor.
A second tranche funding of $10 million in June 2009 is conditional upon Albidon reaching a range of physical and cost performance indicators in the project’s operating plan.
A third tranche funding of $10 million in September is “optional on the part of Pacific Road” according to the statement.
The investment was made out of the $320 million Pacific Road Resources Fund I, which invests in mining projects, related infrastructure and services businesses.
To date, the fund is 25 percent invested, with Albidon being its first investment in nickel mining, said Geoff McNamara, associate director of Pacific Road.
Pacific Road has previously invested in mining projects including the Woodlark Gold Project in Papua New Guinea, Alfredo Iodine Project in Chile and San Francisco Gold Mine in Mexico.
Albidon was not available for comment at time of press.