Strong balance sheet facilitates 2018 R&D loan repayment: Northern Minerals

Strong balance sheet facilitates 2018 R&D loan repayment: Northern Minerals

Australian heavy rare earths producer, Northern Minerals Limited (ASX: NTU) has fully repaid all amounts owing (being US$8.9 million) to Innovative Structured Finance Co LLC (ISF), the Company’s R&D Financier, in relation to amounts advanced to the Company under the R&D loan facility for the 2018 Australian tax year using subscription funds received from the $20 million placement announced on 18 March 2019 and the $15 million share and convertible note subscription announced on 23 April 2019.


Australian heavy rare earths producer, Northern Minerals Limited (ASX: NTU) has fully repaid all amounts owing (being US$8.9 million) to Innovative Structured Finance Co LLC (ISF), the Company’s R&D Financier, in relation to amounts advanced to the Company under the R&D loan facility for the 2018 Australian tax year using subscription funds received from the $20 million placement announced on 18 March 2019 and the $15 million share and convertible note subscription announced on 23 April 2019.

HIGHLIGHTS

·       2018 R&D loan facility with Company’s R&D Financier fully repaid

·       A further $5 million received as part of the $20 million placement announced on 18 March 2019 (final tranche of $5m due by 31 May 2019)

·       $8.5 million received as part of the $15 million share and convertible note subscription announced on 23 April 2019, comprising:

·       $7.5 million in share subscription funds received in full; and

·       $1.0 million of convertible note subscription funds (with a further $1.5 million due today and $5 million due 21 June 2019).

As previously announced on 29 August 2017, the ISF secured loan agreement provided for separate loan facilities for the 2017, 2018 and 2019 Australian tax years, allowing earlier access to the Company’s anticipated Research and Development tax cash refund (R&D Cash Refund) entitlement from the Australian Taxation Office (ATO).

No amounts remain owing by the Company under the 2017 loan facility and amounts owing for the 2019 loan facility (being US$2.493m as at 30 April 2019) are due on 31 December 2019. The final repayment of US$8.9 million for the 2018 loan facility was possible due to the stronger balance sheet resulting from the recently announced $20 Million Placement and $15 Million Subscription.

To date, the Company has received $13.5 million during the month of April 2019 as follows:

1. $5 million received under Tranche 2 of the $20 Million Placement;
2. $7.5 million received under the share subscription component of the $15 Million Subscription; and
3. $1.0 million received under the convertible note component of the $15 Million Subscription.

The remainder of subscription funds to be received under the $20 Million Placement (being Tranche 3 of $5 million) is due by 31 May 2019. The remainder of subscription funds to be received under the convertible note component of the $15 Million Subscription are due later today ($1.5 million) and 21 June 2019 ($5 million).

As the Company has announced previously, the Company lodged its 30 June 2018 tax return with the ATO on 28 August 2018 with the expectation that its R&D Cash Refund would be $21.56 million based on the Company’s lodged tax return. The ATO is still assessing the R&D Cash Refund claim and, as such, has not yet approved the R&D Cash Refund to the Company.

However, the ATO has released to the Company 50% ($10.78 million) of the Company’s R&D Cash Refund claim as announced on 18 February 2019. The Company will continue to work with its advisers and the ATO to expedite the finalisation of the 2018 R&D Cash Refund assessment as soon as possible.

Northern Minerals’ Managing Director, George Bauk, commented “We are extremely grateful to ISF for both the support in providing the R&D facility as well as agreeing to vary the repayment date following delays in processing the tax return.

“While we are disappointed with the delay in processing the tax return, the support from investors for the recent equity issues has allowed us to move forward with our plans to cement ourselves as a reliable supplier of quality heavy rare earths, critical for the electric vehicle revolution.”

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