22/04/2015 - 09:56

Avanco plans $64m capital raising

22/04/2015 - 09:56

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Copper explorer Avanco Resources has launched a $64 million capital raising to fund construction of its Antas project in Brazil into production.

Avanco plans $64m capital raising

Copper explorer Avanco Resources has launched a $64 million capital raising to fund construction of its Antas project in Brazil.

Avanco said the decision to pursue an equity raising came about after it failed to secure loans from the Brazilian banks.

The raising will consist of a $19.9 million placement and a $44.2 million entitlements issue, on top of a $15.6 million financing deal with funds management firm BlackRock.

The placement will be carried out through the issue of 249 million shares at 8 cents each to private equity fund Greenstone Resources, which is managed by BlackRock and the Appian Natural Resources Fund.

The entitlements issue will be on a two-for-seven basis at the same price as the placement, but will be made to both Greenstone and existing shareholders.

The price of the raising is an 8.4 per cent premium to Avanco’s 30-day volume weighted average price of 7.4 cents.

On completion of the capital raising, Avanco’s royalty transaction with BlackRock will also be completed.

Avanco said it wanted to begin construction as soon as possible, as the approaching dry season in Brazil will allow maximum site works to be carried out, ahead of the beginning of the wet season in November.

“On completion of the transactions, Avanco believes it will be fully funded for construction, commissioning and ramp-up of copper production from its high-grade Antas project,” the company said.

Avanco said it would be unhedged and debt-free heading into production.

Open pit mining at Antas is forecast to product about 12,000 tonnes of copper per annum and about 7,000 ounces of gold credits in concentrates per annum.

Avanco said the construction and working capital budget was about $2 million under what was originally estimated, coming in at $78 million.

The company recently completed upgrades to a 10 kilometre mine access road at Antes.

Bell Potter Securities will act as lead manager to the entitlements issue.

Avanco shares were 4.8 per cent lower to 7.9 cents per share at 9:45am.

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