PLATINUM Group Metals (PTM), the Toronto-listed platinum development firm and producer, is to issue shares that will raise $25m which it will use to develop its underground mine Maseve.
The company issued shares for a total of $143m, or some R2bn, of which $73m worth was in public offerings during its 2016 financial year. It also amended facilities with shareholders were draw-downs were attached to production targets.
The company announced overnight that it would issue about 17.1 million common shares at a price of $1.46 a share which is a 10% discount to the firm’s $1.63/share close in New York yesterday.
The proceeds from the ‘bought deal’, to be supported by a syndicate led by BMO Capital Markets, would also be used for the working capital and general corporate purposes.
The proposed capital raising is more than PTM said it would require for Maseve which has been hit be operational delays in its first year.
The mine is designed for production of 250,000 ounces a year (4E). Output was forecast to be 110,000 oz in its first year rising to 180,000 oz, but the company in October put output in the first 12 months at 91,500 oz.
PTM said on January 15 that it would issue nearly 600,000 shares to lenders Sprott Resource Lending Partnership and Liberty Metals & Mining Holdings in return for waivers on existing loan facilities and extensions of covenants.
PTM impaired Maseve for $41.4m last year following slower than anticipation production ramp-up. It subsequently replaced its then contractor with Redpath Mining Contractors & Engineers following the poor delivery of production ramp-up.
Nonetheless, the delayed cash flow and continued poor performance of the platinum price throughout much of 2016 had exerted pressure on PTM’s balance sheet.
It said in its first quarter results announcement that it expected to raise $5m to $15m of additional funding to refinance its debt either through new debt, private or public offerings of equity or the sale of project or property interests.
At November 30, the company held $27.5m in cash slightly down on the $28.5m in cash as at the year-end stage which it published in November.
