PERTH (miningweekly.com) – Junior Galena Mining on Thursday announced plans to raise A$20-million to provide additional working capital, warning that the ramp-up of its Abra base metals mine, in Western Australia, has been delayed.
“The requirement for additional working capital during ramp-up is disappointing, considering the effort and diligence that everyone involved has put into progressing the mine to this stage,” said MD Tony James.
“The revised geology information affecting the ore that was hard against the Abra fault has been a short-term technical change we did not expect or anticipate. That ore has been replaced by lower-grade ore and we will continue our ramp-up to steady-state production as quickly as possible moving away from the upper northern margin of the orebody.
“The rain in the last week of March hurt us as we have had to slow down work until we re-stock the critical supplies required at the mine. The mine handled the rain well, but the main access roads were hit hard causing extended delays into April.”
As a result of the delay in the ramp-up, and the heavy rains, lead production for the 2023 calendar year is expected to reduce from the previous guidance of between 53 000 t and 68 000 t to between 50 000 t and 60 000 t.
Production unit costs are forecast to increase because of the lower than expected lead production and a 12% increase in overall costs since the last guidance was provided in July 2022. Steady-state life-of-mine guidance continues to show strong financial outcomes following the ramp-up time frame.
“The updated guidance for 2023 also includes some of the cost challenges that everyone in the industry is seeing. Our plan is to push through this ramp-up period as quickly as possible to get into consistent steady-state production,” said James.
To fund additional working capital during the ramp-up of Abra, Galena would place 133.3-million shares, at a price of 15c each, with the company saying on Thursday that it had received binding commitments for the placement.
The company’s largest shareholder, Warburton Group, has subscribed for more than 23.8-million shares worth an estimated A$3.6-million, while debt facilities provider Taurus Mining Finance has subscribed for more than 6.66-million shares worth some A$1-million.
The shares will be issued in two tranches, with the first to raise nearly A$13.9-million under Galena’s existing placement capacity, while the second tranche of 40.4-million shares, raising an additional A$6.1-million, will be subject to shareholder approval at a meeting scheduled for mid-June.