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(Alliance News) - Beowulf Mining PLC on Wednesday launched a preferential rights issue of Swedish depository notes, alongside a UK retail offer of ordinary shares.
Beowulf Mining is a London-based mining company with iron ore, graphite, gold and base metal projects in Sweden, Finland, and Kosovo.
Company shares fell 22% to 3.11 pence per share in London on Wednesday afternoon.
The company will conduct a preferential rights issue of up to 516.7 million Swedish depository receipts, with a retail offer of up to 104.0 million ordinary shares in the UK.
The SDR offer price of SEK0.27, or 0.02p, and the UK offer price of 2.06p, represent a 46% discount to the average daily weighted price for both during a trading period of 15 business days, ended Tuesday.
Members of the board and executive management have also agreed to subscribe for a total of 8.8 million new shares, worth GBP181,000.
The Sweden offer amounts to around GBP6.8 million, while the UK offer amounts to GBP2.1 million, before deduction for transaction related costs.
The maximum gross proceeds from the capital raise, assuming all are fully subscribed, would amount to GBP9.1 million.
Beowulf said that it would use the net proceeds, estimated at GBP7.8 million, to finance the continued development of Kallak North in Norrbotten County in northern Sweden.
On Tuesday, Beowulf said that it had received "positive economic results" from the scoping study for the asset, which is part of the Kallak Ore iron project.
The study began last summer, following the award of the Kallak North exploitation concession on March 22. It presents a base case for the northern deposit, which incorporates a mineral resource estimate from May 2021, and an economic assessment for a mining operation producing up to 2.7 million tonnes per year of high-grade iron concentrate over 14 years.
Based on the study, Beowulf said that Kallak North has a USD177 million net present value, with an international rate of return of 15% and a payback period of 4.5 years from the start of construction.
The company also said it was considering integrating Kallak North and Kallak South, possibly starting drilling at the latter this year.
The pre-feasibility study for Kallak North is set to begin in the second quarter of this year.
By Holly Beveridge; Alliance News reporter
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