[miningmx.com] — JUNIOR gold producer Simmer & Jack Mines said on Thursday that it would make a decision regarding its funding options within two weeks.
The company said last week that it was investigating alternative solutions to its
rights offer, which was proposed primarily to repay a R220m bridge loan facility entered into in March 2010 with Rand Merchant Bank.
This bridge loan facility enabled Simmers to participate in the First Uranium Corporation (FUM) recapitalization programme by subscribe for the Rand denominated secured convertible redeemable notes (Rand FIU Notes) issued as part of the programme.
Simmers funded its share of the First Uranium recapitalisation by using about R70m of its cash reserves plus the R220m bridge loan facility.
The company then received permission from shareholders to offer a R360m secured convertible redeemable bonds by way of a rights offer so that it could repay the bridge loan facility and replenish its cash reserves.
“While this remains a suitable option, the Simmers board has since had the opportunity to consider alternative funding mechanisms,” the company said.
Among the alternative solutions being considered by the company is the listing and
sale of part of the R463.9m secured convertible bonds issued by Mine Waste Solutions (Rand FIU Notes) purchased as part of the First Uranium Corporation
recapitalisation programme.
“Simmers believes that the sale of the Rand FIU Notes is advantageous as it provides a mechanism for Simmers to repay the bridge loan facility without diluting the holdings of Simmers shareholders that do not participate in the proposed rights
offer, and offers Simmers’ shareholders an opportunity to participate directly in the
upside from a First Uranium re-rating,” the company said in a note to the JSE.
Simmers said the successful sale of Rand FIU Notes would also obviate the need for all Simmers’ assets to be provided for the next three years as security for the secured convertible redeemable notes to be issued in terms of the proposed rights
offer.
The company said Vulisango Holdings, its largest shareholder and black economic empowerment partner, supports the sale of the Rand FIU Notes.
At 09:45 shares in Simmers were unchanged at 92 cents on the JSE. The stock has
shed 25.81% or 32 cents this month to date.
