Copper360 plans to raise R1.15bn in a rights offer as part of the restructuring of its debt, it said on Friday.
The aims of the restructuring are to raise sufficient funding for short- and medium-term growth; reduce the debt burden to improve profitability; and mine several ore bodies that have achievable growth potential, it said in a statement.
It has entered into a series of agreements over the recapitalisation of the company, the restructuring and conversion of long-term debt instruments on its balance sheet, and the reduction of revenue-based royalty payments.
The group will undertake a rights offer of R1.15bn at an issue price of 50c per share, comprising new equity of R400m and the debt conversion to a maximum of R750m.
The R1.15bn of new ordinary shares will be offered to existing shareholders through a combined clawback offer. Any rights not taken up by existing shareholders have been underwritten in the amount of R260m by clients of and funds managed by Differential Capital regarding the new equity, and fully underwritten concerning the debt conversion.
Copper360 and its subsidiaries have historically issued debt instruments and instruments with preferential rights to boost cash flow. The company has reached agreement with the holders of the debt instruments, and the parties have agreed to the conversion of these instruments in return for shares. The debt conversion will result in the issue of a maximum of 1.5-billion new ordinary shares, the company said.
Copper360 started underground mining operations at its Rietberg mine in the Northern Cape about a year ago. It said its transition from an exploration company to a copper-producing junior miner required additional capital. The capital secured through the clawback offer and the rights offer would enable the company’s sustainable long-term profitability.
It would also provide the capital required to enable it to grow in stages, initially reaching 40,000 milled tonnes per month in 12-18 months, with further growth to 60,000 milled tonnes per month within 24 months.
The proceeds will be used to complete the development of the Rietberg mine and commence the start-up of a second mine and allow the completion of a second modular flotation plant, which will create total processing capacity of 40,000 milled tonnes a month.
The conversion of the debt instruments results in a balance sheet with modest gearing. The additional equity secured from the rights offer creates capital adequacy and will be available for further mine development, the building of a third modular flotation plant and the recommissioning, following upgrades, of a solvent extraction and electrowinning plant, it said.
For the year to end-February, the group reported a 244% widening in its loss to R223.1m, as operating costs rose 177% to R399.4m.
Copper360 has outlined plans to ramp up production and bring new projects online, after a challenging year in which revenue fell short of expectations.
CEO Graham Briggs said at the time of releasing the year-end results that the group saw strong long-term potential but that it had to focus on growth and securing funding. “We need to invest capital to scale production and bring additional projects online.”
Within the next 12 months, the group hopes to reach an annual output rate of 5,000 tonnes of copper.
The opportunities in copper are clear, with demand for the metal expected to surge more than 40% by 2040, driven by the growth of electric cars, solar panels and data centres.
The company’s share price ended down 5.6% at 67c on Friday, taking its year-to-date share price loss to 70%.
With Jacob Webster
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