JOHANNESBURG (miningweekly.com) – Aim-listed Bellzone Mining on Friday announced that it was planning to raise up to £1.7-million through the issue of about 337-million new ordinary shares at a placing price of 0.5p, to enable the company to continue operations until the end of November.

The placing price of 0.5p represented a discount of 3.8% to the closing mid-price of the company's shares of 0.52p on September 19, being the last day of trading before the company’s shares were suspended on the Aim.

The sole investor in these shares would be China Sonangol International.

Bellzone had previously attempted to enter into a $4-million loan agreement with China Sonangol; however, the companies were unable to reach an agreement on the final satisfaction of all conditions of the loan.

China Sonangol had, however, advanced Bellzone $1.5-million under this agreement, with the funds repayable with interest on December 14.

Bellzone explained that the placing shares would be made up of a non-preemptive placing of about 238-million new ordinary shares to raise about £1.19-million, and a further conditional placing of 98.92-million new ordinary shares to raise about $490 000.

Bellzone said it intended to issue the 238-million placing shares through a cash box placing, being a mechanism whereby a company could raise new equity funds through the issue of shares for a noncash consideration in circumstances where it did not have authority to issue such shares directly for cash.

“A cash box placing is not an issue for cash, but an issue of shares made in consideration for the transfer to the issuer of shares in a special purpose subsidiary company,” Bellzone explained, adding that the company’s board had determined to proceed with a cash box placing given Bellzone’s current financial difficulties.

Following this placing, which was not subject to shareholder approval, China Sonangol would hold about 46.25% of Bellzone’s voting rights.

The conditional placing of 98.92-million shares, which was also structured as a cash box placing was, however, subject to shareholder approval.

Bellzone said it had already received irrevocable commitments from certain shareholders representing 21.48% of the voting rights of the company following the placing.

Should the conditional placing be approved by shareholders, China Sonangol would have a 51% interest in Bellzone.

Bellzone added that until it had clarity regarding its financial position, including China Sonangol's views with respect to financing beyond the end of November, it believed it was appropriate for its shares to remain suspended from trading on the Aim.