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Trading in European zinc and lead producer Recylex’ shares was suspended on Monday July 8 at the company’s own request following an unexplained 40% increase in the share price during the prior two days.
Recylex said in a press release on Tuesday that its German sub-group dedicated to lead-acid battery recycling and lead production will require €40.0 million ($45 million) cash in 2020 and 2021: €26 million for the first year and €14 million for the second year.
As for 2019, the company had previously set the German sub-group’s projected cash requirements at €44.4 million but revealed its action plan in today’s release. The group has obtained a postponement of the availability of a tranche of the existing financing of up to €2.4 million until December 31, 2019. The benefit is subject to a global financing agreement being concluded. If the tranche is not made available in 2019, the amount of the German sub-group’s estimated cash requirement for 2019 would be increased by this amount.
Additionally, the German sub-group has received an agreement in principle from Glencore International AG for a new bridge-financing facility of up to €16 million for the period starting August 1, 2019, with a maturity date of November 30, 2019.
They also agreed to move the maturity date of the current €27 million bridge financing to November 30 from July 31.
Both deals are subject to German subsidiary Weser-Metall GmbH’s production not suffering any significant deterioration and to the agreement of the other financial partners.
The German sub-group will also request its financial partners to postpone until the same date a number of repayments representing a total amount of €8 million.
According to the company’s latest records, Recylex produced 123,000 tonnes of lead and 23,000 tonnes of zinc oxide in 2017.
Weser-Metall GmbH recently initiated technical and operational feasibility studies for various investment projects and measures aimed at stabilizing the operation of the foundry with its two furnaces.
In January, the German subsidiary carried out a scheduled maintenance shutdown of its Nordenham smelter due to advanced wear of the furnace. This was caused by a change of operating mode since its connection to a new reduction furnace and consequent technical difficulties.
The German sub-group’s financial struggles come as Fastmarkets’ TCs index for low-silver lead concentrate on a cif China basis have risen to $20-30 per tonne as of late June from $5-15 per tonne in May, attributed to strong demand from Chinese smelters continues.
Recylex has said that discussions with all financing partners could be reinitiated to determine if a global financing agreement is possible only when the studies are finalized and forecasts established.
Recylex’ quarterly financial information for the period to June 30 will be published on July 25.