Kwale miner draws Sh8bn loan on virus woes

Kwale-based Base Titanium has drawn Sh8 billion ($75 million) loan to boost liquidity position in the wake of coronavirus pandemic that has slowed down business momentum.

The firm, which mines titanium in Kwale County, has taken the loan even as it plans for a halt or curtailment of operations should the virus spread further.

The management says its operations have continued uninterrupted but with broad health and safety procedures at a time Kwale is among the high-risk Covid-19 areas alongside Nairobi, Mombasa and Kilifi.

“Full $75 million revolving credit facility (RCF) drawn down to enhance liquidity and provide flexibility during the Covid-19 pandemic,” the firm disclosed in its trading update to March.

An RCF is a line of credit that is arranged between a bank and a business to ensure that a business has access to the funds at any time when needed. It is usually considered short-term financing.

There will be no mandatory repayment until June next year by the firm. As at the end of February, the firm had cash reserves of Sh4 billion ($37.7 million) and no debt though.

In October 2017, the Base Resources established a $25 million RCF to provide the firm with additional funding flexibility.

In 2018, the amount was extended to $30 million, with a weighted average effective interest rate at 8.7 percent.

Both Base Resources and Base Titanium are eligible borrowers under the RCF which also benefits the Kwale operations.

The management said it has cut the number of workers at the Kwale mine site by 40 percent as others work from home and increased buses for workers to ensure social distancing.

During three months to March 2020, mining of the three minerals — Ilmenite, rutile and zircon — rose. That of zircon jumped 32 percent to 9,163 tonnes followed by rutile with 21 percent to 105,035 tonnes.

The firm said it had a backlog of zircon sales due to deferred shipments by some Chinese customers in February but this was cleared last month.