PERTH (miningweekly.com) – Base metals hopeful Heron Resources has unveiled a A$91-million funding package to allow for the commissioning of its Woodlawn copper/zinc project, mitigating the financial impacts of a seven-month delay in construction.

The funding package will consist of a A$35-million non-renounceable entitlement offer of new shares, priced at 20c a share, and a $35-million convertible note provided by Castlelake, Greenstone Resources and Orion Mine Finance Group.

The funding will also include a $3-million stream over zinc by-product and an extension of the maturity date of the existing $60-million loan, by 12 months from December 2022 to December 2023.

Under the A$35-million entitlement offer, shareholders could subscribe for 0.7324 new shares, at an issue price of 20c a share, for every one share held. The entitlement offer will comprise both an institutional and a retail component, and will be underwritten for an aggregate amount of A$10.9-million.

The funds raised under the entitlement offer will be used for additional financial support for the ongoing ramp-up of the Woodlawn project to nameplate capacity, to repay a portion of the company’s outstanding loan facilities with Orion Mine Finance Fund, and to provide working capital and to repay costs of the entitlement offer.

Heron nonexecutive chairperson Stephen Dennis on Friday said that the Woodlawn project remained both economically and technically sound, and retained a strong production profile, albeit with working capital start-up requirements that have been impacted by construction delays and early-stage commissioning issues.

“Heron has faced difficult financial and operational challenges commencing production at Woodlawn, with the delayed start-up severely impacting our working capital needs.

“We have now acted to address these issues, in order to realise the strong technical and operational value which Woodlawn retains, and as the project moves into full production and achieves nameplate processing capacity.”

Dennis said that the company was aware that shareholders would be disappointed with the impact that the start-up delays have had on Heron’s balance sheet, adding that the funding package would offer shareholders the best way forward in light of the difficulties, including the ability to participate in the future upside at Woodlawn.

At steady state, Woodlawn is expected to produce 70 000 t/y of zinc concentrates, 30 000 t/y of copper concentrates and 25 000 t/y of lead concentrates.