MNB - Project financing and sales update for Angolan phosphate project

Minbos Resources (ASX: MNB) just put out an update on financing for its phosphate fertiliser project in Angola.

MNB is currently in construction for the first phase of works at its project.

Here are the latest pictures from site - some of the concrete pours have already happened, and the site layout seems to be coming together nicely for the project's processing plant…

(Source)

So far so good from MNB which is looking to bring a phosphate mine online that is forecast to deliver ~US$55M in EBITDA per year (base case, on average) mine, over a 20 year mine life.

(That EBITDA number is based on the company’s DFS in 2022)

For the last ~12-18 months MNB has been in “secure project financing” mode to build and bring its project into production as quickly as possible.

There have been a few hiccups and delays along the way but MNB had managed to sign three financing deals that (once completed) would fully fund the project.

After today’s update we know that:

1. (Deal #1) ✅ US$10M has now been received (Deal #1) - MNB has received the full US$10M in funding from the Angolan Sovereign Wealth Fund. The final tranche of that was received by MNB inside the last few months.
2. (Deal #2) 🔄 US$12M loan from Angolan bank in the final stages of being completed - With this loan, MNB is at the stage where it just needs to do all of the legal/structuring work before the deal is completed.
3. (Deal #3) 🔄 US$14M loan from the International Development Corporation (IDC) of South Africa expected to be drawn down in July - MNB confirmed that it was renegotiating the offtake condition in this loan to reflect the company’s sales strategy. Once sorted, MNB can move to close out this deal.

MNB had ~A$12.5M in cash in the bank at the end of the March quarter which means construction works can continue while the two remaining deals are finalised.

MNB’s current cash along with the US$26M from the two loan deals (IDC and Banco BAI) that are getting close now are enough to cover the US$29M needed to get both phase 1 and 2 of MNB’s project built.

(Source)

What needs to happen for the two loan deals to be closed?

(Deal #2) US$12M loan from Angolan bank (Banco BAI)

For deal #2 it looks like most of the outstanding requirements are just formalities/legal requirements.

The first thing MNB needs to do is a legal restructure of the corporate structure:

And second is sign off by the Angolan Credit Guarantee Fund (FGC):

Both of these seem fairly straightforward and sound to us like legal paperwork that needs finalising.

(Deal #3) US$14M loan from the International Development Corporation (IDC) of South Africa

For deal #3 the main thing that has changed is the offtake condition to the loan.

Previously the condition was very specific and required one domestic buyer for MNB’s phosphate fertiliser.

Today’s announcement that condition was “currently being updated” in line with MNB’s sales strategy which is a mix of export (into the seaborne market) and domestic sales (to small hold farmers).

Once that condition is amended, we think this loan can be finalised relatively quickly.

Especially considering MNB mentioned in today’s announcement that it was “targeting first drawdown BY July 2025”. (in under two months…)

We actually really like the move away from a single offtake partner being a condition, as it wouldn't really reflect a realistic scenario for MNB’s project once in production.

(plus this single offtake partner seemed to be taking ages to put pen to paper on an offtake, so new optionality on this pre condition is a positive for MNB)

We think being able to negotiate with multiple buyers in different markets will actually be a much smoother process versus the complexities of selling a big chunk to a single named buyer.

What’s next from MNB?

🔄 Construction and assembly of MNB’s Phosphate Fertiliser Plant

We want to see MNB complete construction works and get its plant operation ready.

We should see a fair bit of newsflow on this front between now and the end of this year.

🔄 Lock in remaining financing to get the project into production

At the same time, we want to see MNB lock in the remaining funding deals to cover Phase 1 and 2 construction costs.

As mentioned above, there are two main deals we want to see MNB close out over the coming months.