PERTH (miningweekly.com) – ASX-listed Discovery Metals, which owns the Boseto copper mine in Botswana, has signed a $108-million recapitalisation deal with Singapore-listed investment holding company Blumont Group.
The deal would consist of a A$8.75-million share placement and a $100-million convertible bond placement.
Under the share placement, Blumont would subscribe for more than 73-million new shares in Discovery Metals, at 12c each, representing 15% of the company’s issued share capital.
Blumont has also conditionally agreed to subscribe for 100 000, five-year convertible bonds with a face value of $1 000 each, convertible into fully paid ordinary shares at 15c a share. The convertible bonds would raise some $100-million.
Upon the conversion of the bonds, Blumont would hold a 60% interest in Discovery Metals.
“The structure of the arrangement aligns the interest of Blumont and shareholders, and is expected to allow the company to reduce debt and deploy additional funds to equity-enhancing projects,” said Discovery Metals MD Brad Sampson.
The proceeds from the transaction would be used to repay the revolving credit facility, as well as the principal of the project finance facility. A portion of the funds would also be used to repay corporate advisory fees while the balance would be used to fund development, exploration and working capital.
Meanwhile, Discovery Metals also agreed to appoint Blumont’s Russell Luxford to the board once the share placement has been completed, as well as a second director to be nominated by Blumont, at the closing of the convertible bonds.
Sampson noted that the partnership with Blumont and the additional technical skills that would be added to the board, would deliver significant benefits to the company.
“The restructured project finance facility, particularly the two-year moratorium on principal and interest payments, is planned to enable the company to deploy its available cash to initiatives directed at lifting shareholder value, including project enhancement initiatives and exploration activities,” Sampson said.
The Blumont transaction was subject to a number of conditions, including waivers from current senior debt holders and the restructuring of the finance facility terms, as well as Blumont approving the proposed operational, technical and exploration programmes and budgets at Discovery Metals.
Meanwhile, Discovery Metals on Friday also announced that it would launch a share purchase plan, allowing shareholders to subscribe for up to A$15 000 in fully paid shares, at a placement price of 12c a share.
The share purchase plan could raise a further A$10-million.