Canyon Resources Limited has announced that the Company’s major shareholder, Eagle Eye Asset Holdings Pte Ltd (‘EEA’), has agreed to underwrite the full debt requirements to finance the purchase of 22 locomotives and 550 wagons (‘rolling stock’) and the purchase of a 5-year warranty and service agreement on that rolling stock for the Minim Martap Bauxite Project (‘Minim Martap’ or ‘the Project’), located in Cameroon.
The full underwritten loan amount stands at USD 123,956,539, and under the terms of the agreement, an underwriting fee of 3% of the total underwritten amount, equivalent to USD 3,718,696, will be payable upfront to EEA. Where EEA is called upon under its underwriting, EEA will lend the money to Camalco Cameroon SA (‘Camalco’) (Canyon’s Cameroonian subsidiary) on an unsecured basis.
The key commercial terms are summarised in Schedule 1.
The purpose of the financing is to allow Camalco to close out negotiations and then place an order for the delivery of the rolling stock for Minim Martap. The purchase of these long-lead items will mark a significant milestone for the Project and will ensure control over logistics, cost efficiency, and reliability, with investment into this essential infrastructure demonstrating unwavering confidence in the Project. Camalco is in advanced stages of agreeing to the terms for access to the rail assets of CamRail.
The Company is now working towards finalising the acquisition of the rolling stock, and upon completion, this will bolster Minim Martap’s logistical framework. Most importantly, it underscores Canyon’s commitment to rapidly developing the Project towards production status, at a time when the Definitive Feasibility Study (DFS) is in progress and on track for completion in Q2 2025.
Canyon Chief Executive Officer Jean-Sebastien Boutet commented: “The securing of funding for the purchase of locomotives and wagons marks a significant milestone for Canyon and a major step forward in the development and de-risking of the Minim Martap Project towards production.
“Having our own inventory of rolling stock will play a crucial role in mitigating potential logistical challenges, ensuring the reliability of the Project over the long term, and strengthening our ability to maintain control over schedules and costs.
“The locomotives and wagons account for around 50% of the CAPEX from the 2022 Bankable Feasibility Study, so to secure an attractive funding solution for the purchase of these long-lead items is a very exciting and monumental step forward for the Company and Minim Martap. I would like to thank our major shareholder EEA for their ongoing support of Canyon and Minim Martap. The impact Eagle Eye has and continues to have on the growth and success of the Company is significant, and I look forward to continuing to work with them and delivering on our vision.
“The execution of this underwriting agreement reflects the confidence of both our management team and EEA in the Project’s success, even ahead of finalising the DFS. By securing the financing for these critical long-lead items, we are reinforcing our commitment to efficiently advancing the project into production and delivering long-term value to our shareholders.”
Schedule 1 – Key Terms
- Loan Amount: USD 123,956,539
- Underwriting Fee: 3% of the Loan Amount (USD 3,718,696)
- Interest Rate: 12% per annum
- Loan Term: 60 months (including a 12-month moratorium period) from the date of the first drawdown
- Moratorium Period: 12 months from the first drawdown, during which no principal or interest payments are required
- Repayment Structure:
- After the moratorium period, repayments (principal + interest) will be made in equal six-month instalments over 48 months
- The first repayment is due 18 months after the first drawdown
- Early Repayment Option: Camalco may repay early at any time without penalties
- Security:
- Camalco has agreed not to encumber or create a security interest over the rolling stock
- Canyon cannot create a security interest over its assets or sell any of its assets without EEA’s consent
- Drawdown: As and when Camalco requires funds to pay for rolling stock, it will use the EEA underwriting if no third-party debt facility is in place
- Equity Contribution:
- Canyon must use 30% of any fundraising proceeds towards repaying the loan
- However, there is no obligation to undertake a fundraising initiative
- Collar and Cap:
- If Camalco secures third-party debt funding with an interest rate:
- Higher than EEA’s underwritten rate → EEA covers the interest difference
- If Camalco secures third-party debt funding with an interest rate:
- Lower than EEA’s underwritten rate → EEA is compensated for the difference
