AFG Bank Cameroon: Minim-Martap Loan Suspension Halts Project Funding

• Canyon Resources has abandoned its initial bauxite export target from Cameroon's Minim-Martap project following a loan suspension by AFG Bank Cameroon.
• AFG Bank halted further disbursements until a full review of the project's development schedule, financial model, and economic assumptions is completed, alongside a satisfactory site visit.
• Canyon's subsidiary, Camalco, must provide requested financial information within 15 days and facilitate a site visit within 30 days.
• The decision is a suspension, not a cancellation, of the credit facility, but adds a new financing hurdle to existing logistical delays.
• The Australian Securities Exchange reinstated trading in Canyon shares after the company's voluntary suspension to prepare this financing update.

AFG Bank has stipulated that the halt on disbursements will remain in effect until lenders conclude a full review of several critical aspects of the Minim-Martap bauxite project.

Canyon Resources, an Australian junior miner, has revised its projections, no longer targeting initial bauxite exports from Cameroon's Minim-Martap deposit. This adjustment follows a significant development: AFG Bank Cameroon has suspended further loan disbursements for the project, introducing an additional financial obstacle to the long-standing logistical challenges that have consistently hampered the project's progress.

The company disclosed this change in an update released on August 24. In response to this announcement, the Australian Securities Exchange (ASX) promptly reinstated trading in Canyon shares. The company had voluntarily initiated a trading suspension on August 20, specifically to prepare and disseminate comprehensive information regarding the Minim-Martap project's financing arrangements and its updated development schedule.

Canyon's Cameroonian subsidiary, Camalco, formally received notification from AFG Bank regarding the immediate suspension of all additional drawdowns. This AFG Bank Minim-Martap loan suspension is contingent upon the completion of a thorough review by the lenders. The bank's decision underscores a heightened scrutiny of the project's viability and timeline, impacting the Canyon Resources Cameroon project funding.

The suspension of the credit facility is not a cancellation, but rather a temporary measure pending a comprehensive evaluation. AFG Bank has stipulated that the halt on disbursements will remain in effect until lenders conclude a full review of several critical aspects of the Minim-Martap bauxite project. This includes a detailed examination of the project's development schedule, its underlying financial model, and other key economic assumptions that underpin its viability.

Crucially, the lenders also require a satisfactory site visit to the project location as part of their assessment. Camalco has been given specific deadlines to comply with these demands: it must provide all requested financial information within 15 days of receiving the notice, and the mandatory site visit must be completed within 30 days. This Camalco AFG Bank loan review highlights the bank's commitment to ensuring the project meets its financial and operational benchmarks before further funds are released.

While this situation introduces AFG Bank credit facility uncertainty, the fact that it is a suspension rather than an outright cancellation leaves room for the project to regain its funding once the bank's conditions are met. The onus is now on Camalco to demonstrate the project's robustness and adherence to its planned trajectory.

This development adds another layer of complexity to the Minim-Martap bauxite project finance, which has already faced repeated delays due to unresolved logistical issues. The decision by a local lender like AFG Bank to suspend disbursements signals a potentially more cautious approach to large-scale resource projects within Cameroon, particularly those with a history of development challenges.

For companies involved in Cameroon mining project delays, this incident could serve as a precedent, indicating that local financial institutions are increasing their due diligence and risk assessment protocols. It suggests that future project funding, especially for significant ventures, may require even more robust and transparent financial models, along with highly detailed and achievable development schedules, to secure and maintain lender confidence. This heightened scrutiny impacts deal structuring and due diligence for all stakeholders in the region's mining sector.

Lawyers advising on project finance or mining investments in Cameroon should note the increased scrutiny from local lenders, potentially requiring more robust financial models and development schedules to secure and maintain project funding. This development signals heightened risk assessment for large-scale projects in the region, impacting deal structuring and due diligence.

Source: Original reporting via industry news outlet