[miningmx.com] — COPPER producer Metorex is raising $100m via a rights placement and its is putting in place a revised $100m debt package at Ruashi, its flagship copper operation in the Democratic Republic of Congo.
The $100m or R750m capital raising comes after the company raised R922m in 2008 in a highly dilutive rights issue that outraged shareholders and substantially weakened the share price.
“This capital raising will significantly strengthen the Metorex balance sheet and sets the scene for new project development and value creation,” said Metorex CEO Terence Goodlace.
“We believe that once we’re through with this we’ll have restored the balance sheet,” he told Miningmx. “We’re out of survival mode and going into growth mode.”
The offer takes form of a claw back, which was structured in a way that allowed the major shareholders owning 55% of the shares to put money into the rights issue. They oversubscribed, injecting $80m into the offer. The claw back shares have exactly the same rights as ordinary shares.
The offer will now be thrown open to minority shareholders who can subcribe for their proportionate share. These shares will come from the excess held by the majority shareholders.
The offer is at R3.60/share in the ratio of 33.233 claw back shares for every 100 Metorex shares held on 19 March 2010.
Metorex has secured upfront subscription commitments and undertakings of more than 80% of the $100m.
“The significant support expressed by key shareholders for our recapitalisation and growth strategy, combined with the ability to substantially reduce and in the near term ring-fence Metorex’s project finance debt at Ruashi, will allow Metorex to enter into this new phase,” Goodlace said.
Metorex shares were down 2.75% by mid-afternoon South African time at 460 cents, off a morning low of 450 cents.
Metorex has aggressivly sold assets deemed non-core and is now raising money to advance its copper prospects and put the last of its non-core assets, the Consolidated Murchison gold and antimony mine, into closure mode or care-and-maintenance.
Of the $100m, Metorex will retain $25m in treasury, spend a further $23m on its CRC subsidiary, which includes holding costs and bankable feasibility studies on projects like Kinsenda and Lubembe. Metorex will spend $35m on reducing debt at Ruashi, $13m at Consolidated Murchison and $4m on a bankable feasibility study at Dilala East, another name for Musonoi.
The payment of $35m towards Ruashi, will lower debt there to $100m, which, along with raising a minimum of $60m, will trigger the revised debt package, which will give Metorex this year as a debt repayment ‘holiday’ and cut its repayments every six months to $16m from $25m as it stands now.
“Whilst the punitive hedges implemented during December 2008 remain in place until June 2010, there will be no pressure on Metorex to make any debt repayments,” Goodlace said.
If Metorex brings Ruashi debt to $85m, that debt will be ringfenced within Ruashi as a legal entity, which frees the company up to advance its other projects without these being exposed to Ruashi, he said.
The project most likely to be brought into production first is Kinsenda, an old mine which has mining infrastructure in place and for which Metorex has already started planning. The cost to bring the mine into production is $180m.
Goodlace said earlier comments that a strategic partner into the mix to develop these growth projects now fall away.
Lubembe is a near-surface deposit and would be an open cast operation moving big tonnages at relatively lower grade. Dilala East is not outcropping and is an early stage exploration project.
