Highlights:

• - Jervois Finland has executed a committed Facility Agreement with Mercuria Energy Trading SA (“Mercuria”) to borrow up to US$75 million, secured against its assets including working capital.

 

• - Uncommitted additional tranche of US$75 million, which could potentially increase facility to US$150 million.

 

• - Facility provides Jervois Finland the flexibility to fund future increases in working capital that would result from higher cobalt prices.

 

• - Up to US$50 million available for redeployment elsewhere in the Jervois group, providing significant financial flexibility in how Jervois funds current and future development activity.

 

• - This standby working capital facility represents the first step in what Jervois considers a symbiotic relationship and partnership with Mercuria, consistent with the Memorandum of Understanding announced on 27 July 2021.

 

Australia - 28th, October 2021 – TheNewswire - Jervois Global Limited (“Jervois” or the “Company”) (ASX: JRV) (TSX-V: JRV) (OTC: JRVMF) advises its subsidiaries Jervois Suomi (Holding) Oy and Jervois Finland Oy (“Jervois Finland” or the “Borrowers”) have entered a secured loan facility (the “Facility”) with Mercuria Energy Trading SA, a wholly-owned subsidiary of Mercuria Energy Group Limited (“Mercuria” or the “Lender”).

 

Jervois formed Jervois Finland after closing its acquisition of 100% of Freeport Cobalt, a Finland-based cobalt refining and specialty products business, in September 2021.  The acquisition has the potential to transform Jervois into the second largest producer of refined cobalt outside China, building on its existing assets, the Idaho Cobalt Operations (“ICO”) in the United States and the São Miguel Paulista (“SMP”) nickel and cobalt refinery in Brazil, which Jervois has agreed to acquire.

 

As announced to the market on 14 September 2021, Jervois has appointed a separate senior management team for Jervois Finland, comprised of existing long-term employees of the operations.

 

Key terms

 

Jervois Finland’s Facility with Mercuria is for an initial maximum amount of US$75 million with a maturity date of 31 December 2024.  The Borrowers can draw to the lower of the maximum amount or 80 per cent of the collateral value, where collateral is defined as the value of Jervois Finland’s inventory and receivables, calculated monthly.  Annual interest payable on amounts drawn is LIBOR + 5.0 per cent.

 

The facility is secured against the shares in Jervois Finland and its assets and is guaranteed by Jervois Global.  A maximum of US$50 million is permitted to be transferred out of the Jervois Finland group of companies, for other general purposes in the Jervois Global group.

The Facility includes an uncommitted Accordion for a further US$75 million.  The Accordion is subject to the commitment of the Lender and satisfaction of specific additional requirements related to the security package.

 

A summary of key terms is included in Schedule A.

 

The full text of the terms and conditions of the Facility will be filed and available on Jervois’ corporate profile on SEDAR at www.sedar.com.

 

Utilization and use of proceeds

 

At the time of closing the acquisition on 1 September 2021, Jervois Finland had US$98 million net working capital on its balance sheet, approximately US$23 million more than US$75 million ‘target’ working capital communicated in the ASX announcement, Jervois to acquire Freeport Cobalt for US$160 million (27 July 2021).  Working capital levels fluctuate according to the cobalt market price environment, and other factors.  

 

Jervois expects to utilize the Facility to fund working capital levels more than the US$75 million ‘target’.   The committed Facility amount provides headroom to fund working capital in a higher cobalt price environment.

 

Due to current cobalt prices and buoyant market expectations, Jervois expects initial utilisation    of US$32.5 million to occur in November 2021, subject to satisfaction of customary conditions precedent including those related to execution of security documentation over the assets of Jervois Finland.  Future drawdown proceeds may be used to fund higher working capital levels at Jervois Finland should cobalt prices continue to increase, and where required, funding of the Group’s development activities, including the R$47.5 million1 cash acquisition payment for SMP nickel cobalt refinery that Jervois expects to fall due in the first quarter of 2022, in line with the anticipated Closing.

 

Partnership with Mercuria

 

On 27 July 2021, Jervois announced Mercuria would participate in the Jervois capital raising associated with the purchase of Jervois Finland which resulted in a US$33 million equity investment in Jervois and the parties entered a binding Memorandum of Understanding (“MOU”).  Mercuria is one of the world’s largest integrated energy and commodities companies with over US$100 billion annual turnover.    

 

Execution of the Facility Agreement evidences the mutually beneficial commercial partnership that Jervois has started to establish with Mercuria under the framework of the MOU.  Mercuria and Jervois will continue to work together to advance their commercial footprint and leverage rising demand for nickel and cobalt products.  Additional potential areas of cooperation include risk management services, tolling at SMP and / or Kokkola; cobalt hydroxide supply, freight and warehousing.

 

Jervois’ financial advisor in relation to the Facility was Magma Capital Advisory.

 

On behalf of Jervois Global Limited

 

Bryce Crocker, CEO

 

For further information, please contact:

 

Investors and analysts: James May Chief Financial Officer Jervois Global jmay@jervoisglobal.com

Media: Nathan Ryan NWR Communications nathan.ryan@nwrcommunications.com.au Mob: +61 420 582 887

  

Forward-Looking Statements

 

This news release may contain certain “Forward-Looking Statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995 and applicable Canadian securities laws. When used in this news release, the words “anticipate”, “believe”, “estimate”, “expect”, “target, “plan”, “forecast”, “may”, “schedule”, “expected” and other similar words or expressions identify forward-looking statements or information. These forward-looking statements or information may relate to the timing of the working capital facility drawdown by Jervois Finland, the amount of working capital required, the acquisition of SMP and certain other factors or information. Such statements represent Jervois’ current views with respect to future events and are necessarily based upon a number of assumptions and estimates that, while considered reasonable by Jervois, are inherently subject to significant business, economic, competitive, political and social risks, contingencies and uncertainties. Many factors, both known and unknown, could cause results, performance or achievements to be materially different from the results, performance or achievements that are or may be expressed or implied by such forward-looking statements. Jervois does not intend, and does not assume any obligation, to update these forward-looking statements or information to reflect changes in assumptions or changes in circumstances or any other events affections such statements and information other than as required by applicable laws, rules and regulations.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

      

Schedule A -

 

Borrowers and Guarantors	Jervois Finland Oy and Jervois Suomi Holdings Oy
Lender	Mercuria Energy Trading SA
Parent Guarantor	Jervois Global Limited (ASX: JRV, the “Jervois”)
Committed Facility Amount	US$75 million
Uncommitted Accordion	Additional US$75 million at the request of the Borrowers subject to the commitment of the Lender and satisfaction of additional security requirements
Interest Rate and Fees	Interest Rate – LIBOR + 5.0% pa Commitment Fee (on undrawn amounts only) and Upfront Fee (once off only) – fees in line with market practice
Use of Proceeds	Working capital requirements at Jervois Finland.  Up to US$50 million may be utilised elsewhere in Jervois group
Maturity	Rolling Facility to 31 December 2024
Transaction Security	1st priority security over all material assets of Jervois Finland, including inventory, receivables, collection account, and shares in Jervois Finland
Financial Covenants	Minimum Group Liquidity of no less than 10% of Total Debt Minimum Book Equity Ratio of no less than 35%
Undertakings / Covenants	Includes inter alia specific restrictions and undertakings related to operations, mergers/de-mergers, ownership of Borrower, disposal of assets, Financial Indebtedness, Security and Financial Support; General undertakings and covenants common in facilities of this type; Mercuria to be first port of harbor for any working capital requirement
Documentation / Law	Market standard / English and Finnish

 

1 Equivalent to US$8.9 million at USD/BRL exchange rate of 5.35