Saudi’s Ma’aden Plans $1.5bn Rights Issue, HSBC To Advise

Saudi Arabian Mining Co will seek shareholder approval for a SAR5.6 billion ($1.49 billion) rights issue to help to fund its expansion plans, the company said on Thursday.

The company, better known as Ma’aden, intends to use the money to expand its phosphate and gold operations, as well as increase funding for its aluminium business, it said in a bourse filing, adding that a date for the shareholder vote would be announced later.

Ma’aden is in the middle of an extensive expansion through its Waad al-Shamal project in the north of the kingdom. The $9 billion scheme will include a phosphate mine, several major processing facilities, smaller downstream factories and a residential area.

The project will have production capacity of 16 million tonnes a year of phosphate concentrate, sulphuric acid, phosphoric acid, as well as plants to produce calcium monophosphate and calcium diphosphate, Ma’aden has said. Phosphate production is expected to start in late 2016.

Banking sources said that HSBC’s Saudi Arabian arm will advise on the rights issue. Its mandate has been in place for some but it hasn’t always clear whether the capital increase would go ahead, two banking sources in the kingdom said.

The mandate was part of HSBC’s role in arranging wider financing for the Waad al-Shamal project, one source said.

Ma’aden could not be immediately reached for comment on the advisory mandate and HSBC declined to comment.

Ma’aden has already secured a $4.2 billion loan package from commercial banks and export credit agencies to fund the construction at Waad al-Shamal, which loosely translates as Northern Promise.

Two Saudi government funds – the Public Investment Fund and Saudi Industrial Development Fund – are also providing funds for the project.