CREDIT LINE FOR CHILISAI PHOSPHATE PROJECT APPROVED

("Sunkar" or the "Company")

 

 

Sunkar Resources plc (AIM:SKR) is pleased to announce that ATF Bank Kazakhstan ("ATF"), a member of the UniCredit Group, has approved a credit line (the "Loan") for the Chilisai Phosphate Project in Kazakhstan. The Loan envisages ATF providing up to $15 million in debt financing for a term of up to 3 years, subject to finalisation of necessary documentation that includes providing security over Group assets. 

 

It is expected that the Loan will be released to the Company in tranches based on certain operational milestones.  On signing of the Loan documentation, $ 5 million will be available for drawdown by the Company.  A further $10 million will be available for drawdown on Sunkar achieving certain sales of direct application rock ("DAR") and securing off-take agreements forcertain levels of itsDAR.

 

The Loan proceeds will be used to finance fixed assets and working capital for Temir-Service LLP, the 100% owned subsidiary of Sunkar, holding the subsoil use rights forthe Chilisai phosphate deposit in Kazakhstan and will not be available for meeting directly incurred expenses of the Company outside of Kazakhstan. 

 

 

On 30 June 2010, the Company announced it had secured a three year Equity Line Facility ("ELF") of up to £10 million. Having secured the Loan finance for its Kazakhstan operations, the Company intends to draw upon the ELF to fund UK expenses. The Company currently has sufficient cash in hand to provide working capital until mid February 2011. As detailed in the 30 June announcement, the subscriptions will be priced at a 6 per cent. discount to the market price. Whilst any drawdown under the ELF is subject to liquidity and therefore there can be no guarantee that the whole amount can be drawn down, the directors believe this will be less dilutive to shareholders than alternative equity issuance at this time.   

 

Subject to completion of documentation for the Loan and full drawdown of the Loan and ELF taking place, at the current rate of development, this will provide sufficient working capital until the mid-2012. In addition to the credit line from ATF and the ELF, the Company is investigating other funding options which include strategic equity finance prior to obtaining the project finance for the Chilisai project.

 

A further update on Kazakhstan operations is being prepared and will be released shortly.

 

 

"The credit line is the first debt financing secured by the Group and signifies a new stage in the further development of the Chilisai Phosphate Project. This financing ensures availability of funds to meet obligations under the Subsoil Use Contract and to provide additional working capital for increased DAR sales. The funding gives further flexibility for management to continue working towards the launching of the DAP/MAP Project which, combined with current negotiations with potential strategic partners through UniCredit Securities and in close cooperation with UniCredit AG on the project finance, demonstrates the impetus the project is gaining.

 

Additionally, this financing from a local Kazakh bank underlines the high level of support Sunkar's project is attaining within Kazakhstan, where its potential regional significance is very much appreciated." 

 

 

 

Editors Notes

 

 

Sunkar Resources plc, through a wholly owned subsidiary Temir Service LLP, operates a phosphate rock mine in Aktobe Oblast, North West Kazakhstan. Temir Service LLP holds a Subsoil Use Contract to part of the Chilisai Phosphate Rock Deposit. The contract area is estimated to contain 800 Mt of phosphate ore.

 

Sunkar's strategy is to build a world class integrated ammoniated phosphate fertilizer plant with low operating costs. Sunkar's low cost base derives from its near surface phosphate rock deposit, access to sulphur from the nearby North Caspian oil and gas fields and regional long-term marginal priced gas.

 

The Chilisai Phosphate Rock Deposit is ideally located on a transportation hub that spans the agricultural markets from Western Europe through to China.

 

ATF Bank is a subsidiary of UniCredit Group in Kazakhstan with the largest network among foreign banks, employing 4000 people. It offers a full range of banking products, strongly investing in product innovation and sophistication on the corporate sector and facilitating investment of local, foreign and cross border clients.

 

UniCredit Group, the strongest banking group in CEE, is represented in over 50 countries worldwide, with a core presence in Italy, Germany and Austria and Emerging Europe. With a network of over 10,000 branches and offices worldwide the first truly European bank serves more than 40 million customers.