Allegiance raises first A$15m of A$33.6m target

7th October 2022 By: Esmarie Iannucci - Creamer Media Senior Deputy Editor: Australasia

PERTH (miningweekly.com) – ASX-listed Allegiance Coal has raised an initial A$15-million in the institutional component of its A$33.6-million entitlement offer launched earlier this month.

The company on October 5 announced an eight-for-five pro-rata renounceable entitlement, priced a 5c a share, to raise A$33.6-million to fund the refurbishment of the Black Warrior and New Elk mines, in British Columbia.

The offer price of 5c a share represents a 47.3% discount to Allegiance’s five-day volume weighted average share price of 9.5c. The retail component of the entitlement offer will open on October 3 and is expected to close on October 25.

The capital raise followed Allegiance in August securing a $40-million loan and an up to 40 000-t-a-month offtake agreement with New York-based financier Marco.

Allegiance in July launched a strategic review of its portfolio management and ongoing liquidity requirements, given the performance of its operating mines in the US, saying the company had been unable to successfully ramp up production to previous expectations at its two operating mines, and had been unable to secure medium term equipment financing at both Black Warrior and New Elk, which has driven lower-than-expected performance.

The results of the strategic review will see the company continue to optimise performance at both mines simultaneously, and to reduce expenditure on Tenas, to simplify managing the environmental assessment review process, and to delay the independent feasibility study on the Short Creek underground mine, until the acquisition of the Short Creek asset is complete.