Netherlands-based export credit agency Atradius has signed a letter of interest that could support funding up to 60 per cent of Renascor Resources’ Siviour graphite project in South Australia on favourable debt financing terms.
The 60% of initial Siviour Graphite Project capital expenditure is expected to qualify for Dutch ECA cover, which is often used to assist Dutch exporters in winning export transactions and increasing the capacity to raise finance from banks for projects involving Dutch exports.
Atradius is the official ECA that administers the ECA scheme for the Government of the Netherlands. In order to promote Dutch exports, Atradius offers insurance and guarantee products for projects involving the export of capital goods from the Netherlands.
The Dutch ECA scheme was identified as applicable to Renascor’s Siviour Graphite Project based on the sourcing of Dutch content through Renascor’s Dutch strategic engineering partner, Royal IHC.
Renascor has estimated that up to approximately 60 per cent of project capital expenditure is expected to qualify under the Atradius ECA Cover.
Interest rates charged by lenders on debt guaranteed by ECA Cover are typically lower than commercial rates, as repayment of the debt is insured, with longer tenor also a feature of ECA supported debt.
Commenting on the in-principle support from Atradius, Renascor Managing Director David Christensen stated that the LOI from Atradius was an important milestone in Renascor’s progress to secure project financing for the Siviour Graphite Project, continueing to reinforce Renascor’s aim to become a globally significant graphite producer.
“Graphite is classified as a “critical raw material” for many European governments,” Mr Christensen.
“Access to graphite in politically stable countries, like Australia, is limited. The Siviour Project is the largest in Australia.”
The LOI represents the first milestone in Renascor’s engagement with Atradius. The next step in obtaining ECA cover involves further due diligence by Atradius and, assuming a satisfactory outcome, a positive decision from the relevant committees of Atradius can be secured.
It is common to work with one or more financial institutions in parallel with Atradius with the intention to fund the transaction supported by insurance from Atradius. The LOI itself does not constitute a commitment to provide ECA cover and there is no certainty that an agreement will be reached between the parties. Renascor will assist Atradius through its required due diligence investigations.