Discovery Metals says it has executed a legally binding term sheet with Blumont Group Limited an investment holding company listed on the Singapore Stock Exchange, for the recapitalisation of the troubled company.
According to DML, which operates Boseto copper mine in Botswana, the recapitalisation proposal comprises a AUD8.75 million placement with Blumont agreeing to subscribe for 73,047,967 fully paid ordinary shares in the capital of Discovery Metals at AUD0.12 per share, which is expected to raise AUD8,765,756 for the company (Placement).
The proposal also include a USD100 million in convertible bonds which Blumont has conditionally agreed to subscribe for 100,000 5 year convertible bonds with a face value of USD1,000 per bond, convertible into fully paid ordinary shares in the capital of Discovery Metals at AUD0.15 per share. The Convertible Bonds are expected to raise USD100 million for the company.
Discovery Metals’ Managing Director, Brad Sampson said the structure of the arrangement aligns the interests of Blumont and shareholders, and is expected to allow the company to reduce debt and deploy the additional funds to equity enhancing projects.
“The partnership with Blumont and the additional technical skills that are expected to be added to the Board by the appointment of Russell Luxford is anticipated to deliver significant benefit to the Company,” Sampson said.
“The restructured project finance facility, particularly the two year moratorium on principal and interest payments is planned to enable the Company to deploy its available cash to initiatives directed at lifting shareholder value, including project enhancement initiatives and exploration activities.”
Discovery Metals has agreed to appoint Russell Luxford to the Board on completion of the issue of the Placement Shares and to appoint a second director nominated by Blumont simultaneously with the closing of the Convertible Bonds.
Russell Luxford is an engineer with over 30 years’ experience in the mining industry working in senior technical and managerial positions for Citadel Resources Group, Ma’aden, WMC, Rio Tinto, RGC and others.
His expertise is principally in project development (including commissioning and ramp-up) and operational effectiveness for mine and processing performance improvement.
The company is planning to seek shareholder approval for the Bond Issue and send out a notice of meeting to all shareholders. The notice is expected to be accompanied by the Report, and contain full details of the Transaction and the control effects of the Transaction.
“The Directors intend to recommend that shareholders vote in favour of the resolutions to approve the Bond Issue, in the absence of a superior proposal. “
Blumont Group Ltd operates in three reportable business segments. Its investment holding segment makes investments in transferable securities, including, but not limited to, marketable shares, warrants and debentures.
The group’s sterilisation segment provides contract sterilisation and polymerisation services to food packaging, medical devices, cosmetic raw materials and consumers products. Its property segment is engaged in the development of properties for sale and long-term holding of properties for rental and related income.
Blumont has embarked on a new strategy to become a company with multiple and diversified mineral and energy resources assets and it has been actively pursuing and acquiring new investment opportunities in this sector. Within this strategy Blumont Copper Pte Ltd has been formed to identify and invest in quality copper assets. Blumont Copper is 85% owned by Blumont Group and 15% owned by Inés Scotland and other former Citadel Resources executives.
Blumont has nominated Blumont Copper and two shareholders of that company as the subscribers for the Placement Shares, and Blumont Copper as the subscriber for the Convertible Bonds.
