Aus Mines' $US12m deal for cobalt work

Perth-based Australian Mines has secured a $US12 million convertible note facility with a New York fund, as it seeks to continue development of a Queensland cobalt project and completes the acquisition of a second cobalt deposit.

The deal will be in three tranches, each valued at $US4 million, of unsecured interest-free convertible securities.

The investment is from Bergen Asset Management’s Bergen Global Opportunity Fund 2.

Australian Mines said it had fully funded for a work program across its project portfolio.

Part of the proceeds from the deal announced today will be used to complete the Flemington cobalt project in NSW from Jervois Mining, and fund exploration at the deposit.

Australian Mines secured an option over that project in October 2016, and announced in August it would proceed to full ownership, at a cost of around $4 million.

The cash will also go towards supporting the company’s balance sheet as it works towards financing discussions on the Sconi project, located in Queensland, and continue operation of its demonstration processing plant in Perth.

The company said the agreement was structured to limit share dilution and provide flexibility on competitive terms.

Australian Mines managing director Benjamin Bell said it was a significant investment from Bergen, which he said had supported a number of successful ASX-listed companies over the years.

“The issue of these convertible securities reinforces the significant investment interest we have received out of the US over the past 12 months,” he said.

“The investment structure gives a flexible facility and minimises any dilution at current levels for Australian Mines’ shareholders.

“It also allows the flexibility to accelerate progress at our promising Flemington project and greenfields Thackaringa Cobalt project in NSW in parallel to delivering our development program at Sconi where, pending a positive bankable feasibility study and successful funding negotiations, we plan to commence construction in early 2019.”

Shares in Australian Mines were down 12.7 per cent to be 5.5 cents each at the time of writing.