Premier African Minerals (LON:PREM) has agreed a £1.65mln convertible loan facility with financier Darwin to complete the construction of its RHA tungsten mine in Zimbabwe.
The deal comprises 66 loan notes worth £25,000 each that will be repaid or converted at the rate of seven per month starting from October.
Eighteen of the notes will be issued immediately, 30 next week and 18 at the start of June. Premier will receive 85% of the par value.
George Roach, chief executive, said: "RHA Tungsten is now fully funded into production based on current budgets.
"The most encouraging aspects of this financing instrument are that there is no shareholder dilution at this time, a real opportunity to repay debt and in so doing, avoid any equity conversion and at the same time, any failure to meet a repayment when due will not constitute a default, but rather a trigger affording a right for note holders to convert the notes due at that time only to equity at 90% of the then ruling share price."
House broker Northland noted: "Importantly with this latest Darwin facility, Prem has the potential to repay the debt thereby avoiding further equity dilution.
"Another benefit is that there is also no risk of a default as the loan notes will be converted into shares, should Prem not be able to repay them."
Shares eased around 14% to 2.025p.