Strategic Natural takes on tough new loan facility

South Africa-focused Strategic Natural Resources (SNR) said it had agreed a new 10 million pound loan facility to help it with short term costs.

The unsecured loan facility with Land Consultants (LCL), an Isle of Man investment fund, is for a term of up to 12 months and can be taken in amounts of at least £1m.

However, it comes with the caveat that LCL has the right to convert the amount that remains outstanding into new ordinary shares in the company at 25p per new share, for a period of 12 months after any drawdown date.

Interest is also payable on amounts drawn down at a rate of 20% per annum, with a minimum amount payable of six months interest on any drawdown.

SNR said it intended only taking the minimum amount operationally required under this facility.

Due to LCL's ability to convert the amounts drawn down into shares, SNR said it would only draw down amounts which, on conversion, would not exceed the company's authority to allot new shares from time to time.

SNR Chief Executive David Nel said the flexibility gave the firm accessibility to cash if needed and the necessary financial capability to achieve production and delivery targets, without encumbering any of SNR's assets.

"The new loan facility is a bridging facility that will assist us in achieving our goals in the short term, whilst we continue to negotiate longer term debt solutions," he said.

The company's shares were down 2.3% by 1045 on Monday following the announcement.