Alcyone Resources has received firm commitments to raise $11.2 million via a share placement to sophisticated and professional investors of Southern Cross Equities, and will use the funds to accelerate development of its Twin Hills silver project in Queen
Alcyone Resources has received firm commitments to raise $11.2 million via a share placement to sophisticated and professional investors of Southern Cross Equities, and will use the funds to accelerate development of its Twin Hills silver project in Queensland.
The placement will be completed in two tranches.
The first tranche will comprise 118 million shares at a share price of 3.5 cents each to raise approximately $4.1 million.
The second tranche will comprise 202 million shares at the same issue price to raise $7.1 million.
In a statement to the Australian Securities Exchange, Alcyone said it had initially sought to raise up to $10 million.
"However following an exceptionally strong response from investors, the Company elected to accept a further $1.2 million in over-subscriptions to allow a greater number of investors to participate," the statement said.
In addition to the Twin Hills project, Alcyone said it will now move to complete negotiations and documentation for contracts relating to mining, consumables, major equipment components and construction as well as accelerating exploration on its key targets.
Once the share placement is completed, together with a non-renounceable rights issue, Alcyone will have raised a total of $16.6 million.
See company statement below:
Alcyone Resources Limited (ASX: AYN; 'Alcyone' or 'the Company') is pleased to announce it has received firm commitments to raise approximately $11.2 million through a share placement to professional and sophisticated clients of Sydney-based Southern Cross Equities Limited. The proceeds will be used to accelerate development of the Twin Hills Silver Project, part of its 100%-owned Texas Silver and Polymetallic Project in south-east Queensland.
The placement will be completed in two tranches:
- Tranche 1 comprising approximately 118 million shares at 3.5 cents per share to raise approximately $4.1 million will be completed under the 15% placement capacity allowed under ASX listing rules;
- Tranche 2 comprising the issue of approximately 202 million shares at 3.5 cents per share to raise approximately $7.1 million will be subject to shareholder approval, with a general meeting proposed to be held in January 2011.
Alcyone had initially sought to raise up to $10 million through the share placement, however following an exceptionally strong response from investors, the Company elected to accept a further $1.2 million in over-subscriptions to allow a greater number of investors to participate.
On completion, the share placement, together with the non-renounceable rights issue announced on 25 November, will increase the Company's total capital raising to approximately $16.6 million (excluding costs).
The proceeds will be used to complete engineering and construction work associated with the commencement of commercial silver extraction at Twin Hills, with a development schedule for the Project to be announced in due course. In addition. Alcyone will now move to complete negotiations and documentation for contracts relating to mining, consumables, major equipment components and construction as well as accelerating exploration on its key targets
Alcyone's Managing Director, Mr Andrew King, said he was delighted by the strong level of investor support for the capital raising which also reflected growing investor interest in emerging silver producers given the recent increase in the silver price.
"We had an outstanding response from investors and I would like to thank our existing shareholders for their continued support and welcome our new shareholders to the register.
Following the completion of Tranche 1 and Tranche 2, subject to shareholder approval, Alcyone will be fully funded to recommence commercial silver extraction, starting with the imminent re-irrigation of the existing heaps at Twin Hills, then seeking to ramp up to full scale production as soon as the construction work is completed," he said.
Alcyone's recently-completed economic review of the Twin Hills Mine indicated the Project is well placed to generate strong operating margins based on a forecast annual ore processing rate of 1Mtpa, from the Twin Hills Resource.
The economic model forecasts an average head grade of approximately 80g/t Ag based on the current JORC Mineral Resources, as detailed in Appendix 1, and assumes an average recovery of 69%. This is considered to be conservative based on the extensive metallurgical testwork undertaken by the Company.
At this production rate, the operation would generate average annual silver production of between 1.5 and 2Moz (with fluctuations from year to year typical of a heap leach project) and have forecast unit cash operating costs of approximately A$13.50/oz.
At current silver prices of over A$29/oz, this would translate into a robust operating margin of approximately A$15/oz, enabling the Project to generate strong cash flows.
Mr King said work on the completion of a revised mineral resource estimate for the Twin Hillsdeposit and nearby Mount Gunyan deposit was also progressing well.
"We have conducted extensive exploration work over recent months and are now finalising an updated resource estimate for the Twin Hills and Mount Gunyan areas," he said. "This process has been slightly held up due to delays at the assay laboratory, but we expect to complete the revised resource estimate early in the first quarter of 2011 and commence work on a new reserve calculation shortly thereafter."
"The additional funding will also enable us to maintain the current momentum of our exploration program at Texas, with an emphasis on additional drilling to increase our silver resource inventory and continued testing of our regional copper targets, particularly the exciting new Hornet discovery," Mr King added.
"Weather permitting, we are aiming to undertake some more geophysics at Hornet and potentially a RAB drilling programme during December and January. The results of this work will be reviewed in conjunction with the outstanding recent diamond drilling assays to develop an expanded regional exploration and drilling programme to start as soon as the ground dries out in 2011," he added.
