PERTH (miningweekly.com) – Uranium hopeful Vimy Resources plans raise A$20-million to assist in the development of its Mulga Rock project, in Western Australia.

An initial A$4.6-million will be raised through a two tranche placement to new and existing institutional and sophisticated investors.

The first tranche will consist of 5.6-million shares, and will be placed at a price of 26c a share, while the second tranche will consist of over 12-million shares, at the same price.

Resource Capital Fund (RCF) will take up some A$2.8-million of the second tranche placement, and will hold a 13.6% interest in Vimy at the completion of the placement.

The share placement will fall within the company’s placement capacity, and as such does not require shareholder approval.

Meanwhile, subject to shareholder and Foreign Investment Review Board approval, Vimy will convert a A$15-million unsecured bridging loan from RCF into equity, at the placement price of 26c a share, for 57.6-million shares.

The proposed conversion of the RCF loan into equity represents 23.3% of Vimy’s shares on issue, after the completion of the placement, and will increase RCF’s total shareholding in Vimy to 29.9%.

If approved, the agreement will allow RCF to nominate a representative to the Vimy board, for so long as the company maintains a 10% holding, as well as an undertaking by Vimy to offer RCF the right to participate in future equity fundraising.

Vimy MD Mike Young said on Friday that the conversion of all debt into equity greatly improved the company’s capital structure and provided greater financial flexibility for the business into 2017.

On the placement, Young said that it allowed Vimy to complete an important drilling programme at Mulga Rock, and to fully investigate the bulk sample anomaly from the Ambassador test pits.

“Our world-class Mulga Rock project continues to demonstrate that simple mining and extraction processes will achieve excellent results. The definitive feasibility study remains on time and within budget to be completed in the first quarter of 2017, and our focus is shifting to offtake contracts and funding.”