LONDON (Alliance News) - Papua Mining PLC on Friday said it has agreed a GBP400,000 financing package through share sales, note issuance and loans, with funds designated for completing the geochemical sampling programme at Mount Visi and to carry out the initial phase of drilling.
The exploration company, which has projects in Papua New Guinea, conditionally agreed to raise up to GBP262,000 before expenses by placing 26.2 million shares at one pence each to certain of its existing shareholders.
Michael Somserset-Leeke, a substantial shareholder with a 23.41% stake who is investing GBP112,000 in the placing in exchange for 11.2 million shares, has agreed to provide an interest-free short-term loan of GBP50,000 to the company.
That will increase Somserset-Leeke's shareholding to a 29.17% stake following the placing, a separate issue of shares to John Benseman, and if other shareholders fail to take up any shares in a separate open offer.
In addition, Somserset-Leeke has agreed to invest a further GBP88,000 by subscribing for convertible loan notes. Shareholder approval is required for issuing the convertibles. The short-term loan will then be repaid and replaced by an equal value of convertibles.
The company is proposing to allow current shareholders to participate in an offer for subscription to raise up to GBP262,000 in addition to the funds raised in the placing.
It has agreed also to issue 2.1 million new shares to John Benseman at the placing price in place of GBP21,000 of "rent invoiced and now payable for the group's offices in Papua New Guinea" for the time from October 2015 to March 2016.
"The Mount Visi target is particularly exciting, given its occurrence at surface and the coexistence of so many strong indicators of nearby mineralised porphyry development," Hugh McCullough, director of Papua Mining, said in a statement.
"We are eagerly awaiting the commencement of the preliminary drilling programme and thank our shareholders for showing their continued support to the business," McCullough added.
As English company law prohibits a public company from issuing its shares at a price that is less than nominal value, Papua Mining proposed a reorganisation of its share capital. It wants to divide each issued existing share into one new share and one deferred Shares. It wants to divide each unissued existing share into 100 new shares.
Shares in Papua Mining were untraded at 2.125 pence on Friday morning.
By Samuel Agini; samagini@alliancenews.com; @samuelagini
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