LONDON (Alliance News) - Metals Exploration PLC Friday said it had raised GBP4.3 million through a placing to provide the company with needed funds following the delay in starting commercial production from the Runruro project.
The company has raised the funds by issuing 148.3 million new shares in the company at a price of 2.90 pence per share - a 28% discount to its closing share price of 4.13p on Thursday and a 36% discount to the stock's average price of 4.52 pence over the past year.
Metals Exploration shares were trading down 3.0% to 4.0 pence per share on Friday afternoon.
Importantly, all of those shares were taken up by existing shareholders in the company, namely MTL (Luxembourg) Sarl, Runruno Holdings Ltd, Baker Steel Capital Managers LLP and Investec Wealth & Investment Ltd.
The shares issued will be admitted to trading next Thursday and will represent around 8.5% of the company's enlarged issued share capital.
Following the subscription, MTL (Luxembourg) has increased its stake to 47.73% from 46.8%, Runruro Holdings stake has increased to 19.35% from 18.98%, Baker Steel Capital now holds a 9.16% stake from its previous 8.97% stake and Investec's holding has risen to 6.75% from 6.65%.
"The board of directors and the company are very grateful for the support the shareholders have provided the company and indeed the ongoing support being provided in this share placement, together with their understanding of the recent events experienced," said Executive Chairman Ian Holzberger.
Metals Exploration has decided to raise further funds after its Runruro project in the Philippines was hit by Typhoon Lando, which caused flooding, debris and water damage, leading to a partial suspension order being issued, therefore prolonging the permitting process.
Eventually, the permitting process was completed in January, but the suspension order has not yet been lifted by authorities despite the rehabilitation work being completed at the operation.
"The combined impacts of the work undertaken to satisfy the conditions for the lifting of the partial suspension order and the increased timeline to complete the permitting process, has depleted the cash resources of the group at the end of February 2016," said Metals Exploration.
Metals Exploration was not expecting to have to raise further funds prior to the typhoon striking, as it had raised USD5.0 million in September after conducting a placing at a price of 3.0 pence per share and secured another GBP3.0 million in a subsequent open offer at the same price.
The company also secured a USD5.0 million debt facility from MTL (Luxembourg) and Runruro Holdings, the two shareholders who took up the 108.3 million shares issued in the placing in September.
However, the delays, alongside a USD2.2 million payment for interest on debt in December, has depleted all those funds.
Metals Exploration has stressed the economic fundamentals of the project remain intact, but said the delays have caused a short-term liquidity issue.
"The main issue facing the project is that its forecasted 2016 cash flow projections do not allow it to meet the June 2016 capital repayment [of] USD15.0 million, and the December 2016 capital repayment [of] USD15.0 million due to the lenders. As such, the company is currently in technical breach of its banking covenants," the company said Friday.
"The company recognises these financial shortcomings and has been in preliminary talks with its current lenders with the intention of commencing debt restructuring immediately after the project enters commercial production," Metals Exploration added. "The company expects that following receipt of funds from the placing and subject to achieving a satisfactory debt restructuring agreement with the lenders as well as clearance to start operations."
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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Metals Exploration (MTL)