PERTH (miningweekly.com) – Tungsten developer Group 6 Metals will raise A$20-million through a share placement to bring its Dolphin tungsten mine, in Tasmania, into production.

The ASX-listed company has received binding commitments for the issue of more than 117.6-million shares, at a price of 17c each, representing a 10.5% discount to its last closing price.

More than 87.7-million shares will be issued under the company’s existing placement capacity, with the remainder of the shares to be issued to MD and CEO Keith McKnight, chairperson Johann Jacobs and executive director Chris Ellis, subject to shareholder approval at the company’s extraordinary general meeting.

Following the share placement, the company will also undertake a share purchase plan (SPP) to raise up to A$3-million at the same price as the share placement. Eligible shareholders can subscribe for up to A$30 000 of additional shares in the company.

The SPP will open on December 6 and close on January 6.

Investors participating in the share placement and SPP will receive one option for every two shares subscribed for, at a strike price of 28c each and a two-year term.

“We are delighted to have secured the support of the new and existing investors who have participated in this A$20-million equity raise as we move closer to a major milestone in the company’s history,” said McKnight.

“The commitments from investors are a strong endorsement of the progress Group 6 Metals has made to date at the Dolphin tungsten mine which will enter the final stages of construction in the coming months. We are also delighted by the ongoing support that our major shareholders continue to provide the company after they were again heavily involved in this placement.

“As we near the commencement of production at Dolphin, this equity raising provides funding certainty for the company at a critical time in our development. Despite several industry-wide challenges faced by construction projects, such as escalations in capital and operating costs, our team has worked tirelessly to ensure the project remains on schedule to reach this milestone in the first quarter of 2023. As recently announced, we have updated our project financial metrics in this environment, significantly increasing the net present value from A$241-million to A$300-million pre-tax.”

The project’s startup capital costs have also increased from the A$72.7-million to A$92.7-million, with deferred capital increasing from A$56.5-million to A$61.2-million, while life-of-mine capital costs have increased from A$129.2-million to A$153.9-million.

“The market fundamentals for tungsten continue to be very positive for Group 6 Metals and we look set to become a significant supplier of tungsten at a very favourable time. With Dolphin on track to come online in 2023, a shortage of tungsten concentrate has been forecast due to increasing demand and limited new supply set to become available in the marketplace,” said McKnight.