JOHANNESBURG (miningweekly.com) – JSE-listed copper-cobalt company Metorex is seeking to raise R750-million in equity so that it can ringfence its Ruashi debt and place the company on a new growth path.

The R750-million equity capital is to be raised by way of a R900-million claw-back offer, allowing shareholders the opportunity to increase their stake at the proposed issue price by applying for more securities.

Some 250 000 000 new Metorex ordinary shares of 10 c each will be offered to shareholders at a price of R3,60 a share, representing a 14% discount to the 30-day volume weighted average share price of Metorex ordinary shares as at January 27.

The claw-back subscribers include the State-owned Industrial Development Corporation, Polaris Capital Management, Minerales Y Productos Derivados, Coronation Asset Management, the Standard Bank of South Africa and Old Mutual.

"Our new focus is on sustainable growth and expansion," Metorex CEO Terence Goodlace said.

Goodlace said that growth would centre on the development of the company's central African copper deposits at Musonoi/Dilala East, Kinsenda and Lubembe in the Democratic Republic of Congo.

He said that the purposed of the capital raising was to secure funding for more exploration drilling at the three growth sites; the servicing of holding costs at Kinsenda; the disposal of Consolidated Murchison or the placing of this antimony mine on care and maintenance; and the creation of sufficient financial reserves to place the company on a sustainable growth path.

Converting Ruashi debt into a nonrecourse facility would allow Metorex to introduce new debt levels to its other projects as well as trigger a debt holiday.

The debt holiday, Goodlace explained, would strengthen the company's balance sheet and allow Metorex to live out its unfavourable hedges until they expired in June.

The Ruashi debt revision included the granting of hedge freedom and Metorex being absolved from the obligation of incurring any further hedges.

The suite of proposed changes would allow Metorex to benefit from Ruashi earlier, especially after the company exited its hedges.

While in 2008 the then cash-strapped company was forced to revise its growth strategy to one of survival, the new management team put in place last year had produced a new mine plan, established two new pits and processed 300 000 t of copper ore at Ruashi in the December quarter.

Ruashi was expected to produce 36 000 t/y of copper and up to 5 000 t/y of cobalt at a cost of less than $2 800/t , net of cobalt credits and excluding financing charges.

Ruashi's solvent extraction/electrowinning plant was virtually complete after more than R752-million had been spent on it in the 2009 financial year.

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