Discovery Metals Limited has announced its intention to undertake a 2 for 1 renounceable rights issue at A$0.02 per new DML share issued and one option for every new DML share issued under the rights issue. The rights issue is conditional on raising a minimum of A$10 million and will raise up to a maximum A$25.76 million.
The company said the recapitalisation is aimed at funding the transition from open pit operations to underground mining at the Boseto Copper Mine in Botswana. “This move is an important step as the mining of consistent higher grade sulphide ore, together with a continued focus on costs should bring stability to operating performance, deliver profitability and significantly improve long-term investment returns for the Company’s shareholders,” it revealed.
In addition to using the funds raised by the rights issue to fund the development of the Zeta Underground Mine, the Company will complete resource drilling at Zeta NE for future underground developments and also pay the Settlement Sum (plus interest) to Sedgman Limited and its subsidiaries (ASX:SDM; as announced to ASX on 7 August 2014).
The Boseto Copper Mine reached another monthly copper production record in August 2014 following a record operating quarter. The result will be announced in the coming days once final reconciliations are completed.
DML plans to undertake a 2 for 1 renounceable rights issue at A$0.02 per new DML share issued.
DML shareholders taking up their entitlement under the rights issue will also receive one option per DML share issued under the rights issue exerciseable at A$0.05 on or before 12 months after the issue date. DML intends to list the options in accordance with the ASX Listing Rules requirements.
The rights issue price A$0.02 per share represents 47% discount to the 30-day volume weighted average price for the Company up to and including 28 August 2014.
DML is in the process of finalising the terms of this proposed rights offer. An indicative timetable is set out below.
The Directors of DML fully support the rights issue and recommend it to DML’s shareholders.
“The funds raised by the proposed rights issue will allow DML to commence the transition of the Boseto Copper Mine from open pit to underground mining in order to unlock value contained within the significant Mineral Resources inventory which exists at Boseto,” DML Chairman Jeremy Read said.
“Within a two year period we are aiming to have commenced two declines at the Zeta Underground Mine, with ultimately three underground mines to be developed at Boseto. This will allow the concentrating facility to be filled with higher grade sulphide ore, leading to significant improvements in the recovery of copper and the overall tonnes of copper produced on an annual basis. ”