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PERTH (miningweekly.com) – Rare earths producer Lynas has announced plans to raise as much as A$83-million through an entitlement offer and institutional placement.
ASX-listed Lynas said the new equity would strengthen the company’s balance sheet and provide it with sufficient liquidity as it transitioned from a start-up to a full business operation.
The company’s stock extended its losses on Tuesday, trading 6% lower at A$0.08 a share. On Monday, Lynas plunged 25%.
In July this year, Lynas announced a streamlining of its operations in an effort to reduce overall costs. This included moving its head office from Sydney, Australia, to Kuala Lampur, Malaysia. Other initiatives to deliver cost savings included reducing the workforce numbers, mostly contractors, improving the asset use, the renegotiation of supplier contracts and the improvement of procurement practices.
The company also announced changes to its senior secured debt amortisation timetable.
“Together with the amended debt amortisation schedule, the new capital provides a more secure financial base for the company,” Lynas chairperson Nicholas Curtis said.
Under the terms of the raising, Lynas would launch a fully-underwritten 5-for-14 renounceable entitlement issue. Participating shareholders would also receive one option for every two entitlement shares.
The entitlement issue would result in the issue of 887.1-million entitlement shares and 443.5-million options, which would have an exercise price of 9c each, and could be exercised by September 15, 2015.
The renounceable issue would raise around A$71-million.
Furthermore, Lynas would also place about 150-million shares with institutional investors, priced at 8c a share, to raise a further A$12-million. One option would also be granted for every two placement shares issued, resulting in some 75-million placement options, which would also have an exercise price of 9c each.
The funds from the institutional placement would be primarily used to meet senior debt repayments due at the end of September.