TIDMZOL
RNS Number : 8294N
Zoltav Resources Inc
04 October 2021
4 October 2021
Zoltav Resources Inc.
("Zoltav", the "Company" or the "Group")
Project Finance for East Bortovoy Development
Zoltav (AIM: ZOL), the Russia-focused oil and gas exploration
and production company, announces an update regarding the Company's
plans to commercialise the eastern fields of the Bortovoy Licence,
Saratov.
Project Finance
Diall Alliance LLC ("Diall Alliance"), the Company's wholly
owned Russian operating subsidiary which holds the Bortovoy
Licence, has entered into two non-revolving credit facilities with
PJSC Sberbank of Russia. The first loan represents a maximum
facility amount of RUB 7,700,000,000 with a final repayment date of
25 September 2031 ("Loan 1") . The second loan represents a maximum
facility amount of RUB 700,000,000 with a final repayment
date of 1 January 2024 ("Loan 2") .
Loan 1 will be used to finance investment costs associated with
the commercialisation of the eastern fields of the Bortovoy Licence
(the "Project"), as well as to refinance Diall Alliance's other
loans including the full repayment of the outstanding principal
debt and accrued interest under the Promsvyasbank PJSC credit
facilities entered into on 13 May 2019 and 16 March 2021. Interest
on Loan 1 is payable quarterly at a rate of 9.9% per annum, fixed
until 31 December 2023, and thereafter at the Central Bank of
Russia interest rate +2.8% per annum.
Loan 2 will be used for the payment of VAT on capital
expenditures within the framework of the Project. Interest on Loan
2 is payable monthly at a rate of 9.3% per annum.
Both loans are secured against 100% of the shares of Diall
Alliance and all of its assets with a book value of at least RUB
10,000,000 per unit.
East Bortovoy Project Summary
The Project represents an expansion of the activities currently
carried out by Diall Alliance, the main operating company, at the
two currently producing fields at West Bortovoy.
The Bortovoy Licence area has nine fields with remaining gas
reserves. Currently, only two fields, Zhdanovskoye and Karpenskoye
have been developed. The Karpenskoye and Zhdanovskoye field
reserves have been depleted by approximately 70% and 40%
respectively and are expected to become uneconomical within
approximately 2-3 years of further production.
The Project provides for a phased commissioning of five new
fields, including: Pavlovskoye - February 2022; Lipovskoye - July
2022; Nepryakhinskoye - March 2023; Mokrousovskoye - 2028; and West
Lipovskoye - 2030.
In order to produce, transport and process gas from the East
Bortovoy fields, the Project requires the construction of a 206 km
gas pipeline, as well as the capacity expansion of the existing
Karpenskoye processing plant (the "Western Gas Plant") from 525
mmcm/year to 900 mmcm/year. Under the Project plan, the 900 mmcm
annual processing capacity is expected to be reached in March
2023.
The Project is split into two stages:
Stage 1: construction of a gas pipeline and development of
Pavlovskoye and Lipovskoye fields
Stage 2: construction of a gas pipeline extension and
construction of facilities at the Nepryakhinskoye field involving
the reconstruction of the Western Gas Plant with an increased
capacity of 900 mmcm/year.
Total CAPEX of the Project, including historical costs, is
estimated at approximately RUB 12.3 billion.
Effects of Project Finance on the Company
As noted in the Company's interim results announcement released
on 30 September 2021, under the terms of the project finance there
are conditions which will restrict intra group transfers and cash
outflows from the Company's main operating subsidiary, Diall
Alliance. This will require the Company to materially reduce its
corporate overheads and streamline costs other than those related
to the Project. As a consequence, it may be challenging for the
Company to maintain its licence obligations with regards to the
Koltogor Licences, its offshore corporate structure, and the
listing of its ordinary shares on AIM. As announced on 30 September
2021, without project finance or alternative sources of capital ,
Diall Alliance would have been unable to service its current loans,
including its credit payment due to Promsvyazbank at the end of
October 2021, due to a cash shortfall expected to arise in Q4
2021.
Furthermore, as announced on 30 September 2021, the Company has
been unable to repay or refinance the shareholder loan (announced
on 14 July 2020 and extended most recently on 21 June 2021) (the
"Shareholder Loan") and will need to seek authority to issue new
ordinary shares pursuant to the agreed conversion terms of 27 pence
per share (if such conversion is requested).
The Board and management will conduct a thorough and c
omprehensive analysis of alternative options to enable the Company
to finance or, if necessary, reduce the Company's corporate
overheads. However, given the Company has for some time been unable
to attract either public or bank finance, it is likely that the
Company will be unable to maintain the listing of its ordinary
shares on AIM beyond the next few months. Further information will
be provided in due course.
Lea Verny, Chairman, commented
"The signing of project finance for East Bortovoy and the
development of those fields is both exciting and critical for the
Company to ensure its future prosperity. An indirect consequence of
the project finance is that the Company will have to substantially
reduce its costs. In light of this, it is important to the Board
that we, together with management, evaluate all alternative options
to finance corporate overheads and find a solution which will be in
the best interests of the Company and its shareholders as a whole.
We will provide further information regarding this in due
course."
Enquiries:
Zoltav Resources Inc. Tel. +44 (0)20 7390
0234
Lea Verny, Non-executive Chairman (via Vigo Consulting)
SP Angel Corporate Finance LLP (Nomad Tel. +44 (0)20 3470
and Broker) 0470
John Mackay / Jeff Keating / Adam Cowl
Vigo Consulting Tel. +44 (0)20 7390
Ben Simons / Fiona Hetherington 0234
Market Abuse Regulation (MAR) Disclosure
The information contained within this announcement is deemed to
constitute inside information as stipulated under the Market Abuse
Regulation ("MAR") (EU) No. 596/2014, as incorporated into UK law
by the European Union (Withdrawal) Act 2018, as amended. Upon the
publication of this announcement, this inside information is now
considered to be in the public domain.
About Zoltav
Zoltav is an oil and gas exploration and production company
focused on Russia . The Company holds the Bortovoy Licence in the
Saratov region of Southwestern Russia, a 3,215 sq km area along the
northern margin of the Pre-Caspian basin, one of the largest
hydrocarbon basins in the CIS. The Bortovoy Licence contains a
number of productive gas fields in the west of the Licence and a
processing plant. The Company is planning to commercialise the
eastern fields of the Bortovoy Licence. For further information on
Zoltav, or to sign up for our news alert service, visit:
www.zoltav.com.
Glossary
Bcm Billion cubic metres
km Kilometre
mmcm Million cubic metres
RUB Russian Ruble
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END
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