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Case study

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ico-naturalResources.pngStonewall Mining (Pty) Limited

Location:South Africa

Deal Type:Early stage, direct investment in Stonewall Mining

Deal Size:Not disclosed

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In March 2011, whilst working as financial adviser to Stonewall Mining (Pty) Limited (“Stonewall” or the “Company”), Strand Hanson provided medium term bridge financing when an equity investor failed to honour its commitments, leaving  the Company with critical short-term working capital concerns.

Strand Hanson structured and arranged a bridge financing package of which Strand Hanson provided 50 per cent., alongside one of its regular funding partners. This enabled Stonewall to avoid bankruptcy and the forfeiture of its assets to the original owners.  The package comprised a secured loan and a 5 per cent. warrant, redeemable at any time within 5 years of the date of investment.

Strand Hanson’s advisory role facilitated the investment being made at short notice, with minimal additional due diligence, given the close working relationship with Stonewall’s management team and Strand Hanson’s strong understanding of the asset base.

In August 2011, Stonewall secured an equity capital investment from Hanhong Private Equity Management Limited (“Hanhong”), which acquired  38.9% of the issued share capital of the Company for a cash investment of $13.0 million.

As part of the Hanhong transaction, Strand Hanson and its co-investor agreed to cancel the outstanding warrants for a payment of $2 million (c.£1.3 million) and the medium term bridge financing package was repaid, generating a return to investors, including Strand Hanson, of greater than 5x in less than six months .

Strand Hanson remains a shareholder in Stonewall, having elected to be paid in Stonewall shares as part of its advisory fee, and looks forward to the success of the Company following its reverse listing into Meridien Resources on the Australian Stock Exchange, completed in October 2012.