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PERTH (miningweekly.com) – The share price of gold hopeful RNI fell by more than 37% on Wednesday after the company announced a A$26.5-million recapitalisation.
The company said that it would undertake a renounceable entitlement issue under which shareholders would be offered 2.5 new ordinary fully paid RNI shares, at an issue price of 2c each, for every share held.
Subscribers would also be issued with an attaching one-for-one option, with an exercise price of 3c each.
The entitlement issue was expected to result in an issue of some 1.25-billion new shares and 1.25-billion options, and would raise up to A$25-million.
Furthermore, RNI would raise up to A$1.5-million through the issue of unsecured convertible notes to provide working capital during the entitlement issue.
The recapitalisation was designed to enable the company to discharge its debt facility with Taurus Resources No 2 Fund before the August 7 repayment deadline, which RNI believed would assist in securing financing for the Grosvenor gold project, in Western Australia.
In April this year, RNI was forced to resume its hunt for a funding partner for the proposed Grosvenor gold project, after a A$60-million project financing package from a London-based fund fell through.
RNI MD Royce McAuslane said that after considering a range of alternatives, the board believed that the recapitalisation plan was the best option for the company to achieve its imperative of extinguishing the Taurus debt.
“As I have previously alluded to, the Taurus debt has been an obstacle in our discussions with the various financiers who have expressed interest in providing RNI with the project financing required to bring the Grosvenor gold project into production.
“We are confident that eliminating the Taurus debt via our recapitalisation plan will clear the way for RNI to successfully conclude those project financing discussions and get on with the job of developing Grosvenor,” McAuslane said.
Previous studies have estimated that the Grosvenor project could have an eight-year mine life, with the 1.4-million-tonne-a-year operation producing about 545 000 oz/y of gold. The project was estimated to have a net present value of A$103-million and earnings before interest, taxes, depreciation and amortisation of A$260-million.
The project was expected to require a capital investment of some A$38.2-million.
All infrastructure and permits were already in place for the Grosvenor project, allowing production to start within some nine months of completing project financing.
RNI shares were trading at a low of 1.9c a share on Wednesday, down from its previous closing price of 3c a share.