Australia’s Kasbah Resources has secured an additional A$5m ($3.55m) convertible loan from strategic investor Pala Investments to fund the advancement of the Achmmach tin project in Morocco.

The Australian mineral exploration and development company said that the balance of the existing Pala loan, which will be A$3.5m ($2.48m) at the time of shareholder approval, will be further increased and changed into the convertible loan, providing an additional funding of up to A$1. 5m ($1.06m).

Kasbah expects to begin construction of the tin project in the first half of next year.

To be priced at A$0.012, the convertible loan is conditional on certain conditions, including Kasbah shareholder approval.

Under the arrangements, Kasbah will receive an immediate advance of A$500,000 under the existing loan agreement.

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Kasbah will use these funds to meet development costs for project financing, engineering and technical optimisation work.

Kasbah Resources CEO Russell Clark said: “The financing announced today removes a near-term repayment event and provides Kasbah with further capital to progress key workstreams, including engineering and financing ahead of project construction planned for the first half of 2019.”

“The financing announced today removes a near-term repayment event and provides Kasbah with further capital to progress key workstreams.”

“We carefully considered our near-term funding options prior to agreeing to proceed with the Pala convertible loan proposal.

“It is important to note that Kasbah remains free to progress any alternative funding proposals that emerge prior to the shareholder vote that is expected to be held in December 2018.”

Subject to closing conditions, a financial close on the convertible loan facility is anticipated to take place by the end of December.

Based on the definitive feasibility study (DFS) released in July, the project development requires a capital cost of $96.4m.

The project is estimated to have post-tax net present value (NPV) of $98.1m and an internal rate of return (IRR) of 23%. Through a proposed underground mining operation, the project will produce 750,000t of ore per year over an initial mine life of ten years.

Kasbah owns a 75% interest in the project, while the remaining stake is held by its joint venture partners, Toyota Tsusho (20%) and Nittetsu Mining (5%).