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Why the BCI Minerals (ASX:BCI) share price reached a multi-year high today

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The BCI Minerals Ltd (ASX: BCI) share price has surged higher today. This came after the company announced the approval of a loan for its Mardie Salt & Potash Project. During morning trade, the BCI Minerals share price reached a multi-year high of 30.5 cents. By the market’s close, the company’s shares had slightly retraced back to 30 cents, up 7.1% for the day.

What’s driving the BCI Minerals share price higher?

The BCI Minerals share price was on the move today after investors digested the company’s positive announcement.

According to BCI Minerals, the Northern Australia Infrastructure Facility (NAIF) board has approved a $450 million loan facility for the company’s Mardie Salt & Potash Project.

The agreement follows 18 months of ongoing discussions between both parties, which included a feasibility study in July 2020.

The Mardie Project, located in the Pilbara region of Western Australia, contains salt and sulphate of potash (SOP). BCI Minerals plans to develop the site with construction of large ponds and crystallisers over a 100sq km area. In addition, the company will build two process plants and a new port facility to export the minerals.

It’s estimated the life of the project will be 60 years, and it will become a tier 1 salt and SOP project.

Terms of the loan

Under the terms, the borrowing of the loan will be under BCI Minerals’ subsidiary, Mardie Minerals Pty Ltd, which owns the Mardie project. The loan will be senior secured on an equal footing with a commercial bank, including any senior secured debt tranches.

The loan, pending various conditions to be fulfilled, will be used to fund the construction of the Mardie Project. This will allow BCI Minerals to bring the development up to speed while covering financing fees and costs. While draw down isn’t expected until the second half of FY22, the company will use capital to initially fund future works.

What did management say?

BCI Minerals managing director Mr Alwyn Vorster commented on the positive news, saying:

We are pleased to receive conditional NAIF Board approval for a A$450 million long tenor loan. This loan will be the largest NAIF allocation to a WA based company to date and recognises the potential long-term benefits which Mardie will bring to the region, including new port infrastructure available to third party users.

Importantly, the loan will also provide significant momentum for BCI to secure the remaining debt and equity funding components required for Mardie’s development. We acknowledge the strong support from various Federal and WA State Government ministers and departments.

Further adding to his comments, BCI Minerals CEO Mr Chris Wade said:

We are delighted to be able to support the development of the Mardie Salt & Potash Project which by supplying agricultural and chemical industries across Asia offers exciting export opportunities. Locally, the Project will also bring significant economic benefits to the Karratha, Dampier and Onslow areas.

BCI Minerals share price summary

The BCI Minerals share price has been trekking higher over the past 12 months, up more than 76% from the 17 cents level at which it finished 2019.

The company’s shares reached a 52-week low of 9.7 cents during March 2020, before surging upwards to today’s multi-year high.

BCI Minerals has a market capitalisation of $176.5 million and a price-to-earnings (P/E) ratio of 311.

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Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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