Environmental Clean Technologies Limited (ASX: ECT) (ECT or Company) provides the following update in regard to NMDC’s board meeting held on 31 January, and the subsequent program to proceed to financial close of the Company’s India project and project commencement.
- India project partners agree pathway to project signing and financial close
- India project financial close target date – 31 March 2019
- ECT project funding obligations program to include incentivised early Equity Lending Facility (ELF) loan repayment program
Progressing the project to financial close
Further to the Company’s announcement of 24 January 2019, project partner and India’s largest iron ore miner NMDC, held its board meeting late last Thursday (31 January 2019).
The Company subsequently requested a trading halt (31 January 2019) pending the outcome of that meeting, which included the tabling the Research Collaboration Agreement (RCA) commercial terms for ratification of the previously provided in-principle approval to proceed.
The Company’s other partner and project host, NLC India Limited (NLCIL) previously provided their approval of the RCA commercial terms at a board meeting on 14 November 2018.
NMDC confirmed that an immediate decision during the meeting was deferred, to allow time for several questions from directors to be answered.
ECT Chairman Glenn Fozard commented, “As with all boards, directors are entitled to seek clarification prior to passing a resolution.
“We understand that the questions were subsequently addressed to the director’s satisfaction, paving the way forward.”
ECT Chief Operating Officer, Jim Blackburn, currently in Chennai, added, “The outcome of NMDC’s board meeting is positive in that it takes us in the right direction, and we don’t anticipate a material impact to the target timeline for financial close”
“Over the past four days we have been closely engaged with all parties to the project and we appreciate that these final steps require patience and commitment from all sides. As a result of these meetings and discussions, we are in clear agreement with our project partners that the process will run its planned course over the balance of February (see table below).”
“Importantly, NMDC’s board meeting and subsequent discussions have provided the confidence for the partners to agree to forge ahead with preparations for ratification, signing and financial close ahead of commencement of this major joint project.” The immediate next steps include ‘freezing’ the RCA, signing of the RCA, subsequent financial close and project commencement, targeted by 31 March 2019.
Financing ECT’s Project Obligation
Under the RCA, ECT is required to make funding commitments to the project including project working capital, resourcing to the project management team and project control committee, and the project bond.
In parallel to the abovementioned approval activity with NMDC and NLCIL, the Company is progressing its preparations to meet these commitments before execution of the major capital works contracts.
To this end, the Company has structured a program that includes the incentivisation of early ELF loan repayments, avoiding the need to pursue a capital raising via the issuance of new securities.
A separate announcement outlining the details of the program will be made in the due course.
The Company requests that the current trading halt be lifted.
For further information, contact:
Glenn Fozard – Chairman [email protected]