Perth-based Dragon Mining NL has announced plans to raise $35 million though secured convertible notes to fund therecommencement of production at its second centre at Vammala in Finland.
Perth-based Dragon Mining NL has announced plans to raise $35 million though secured convertible notes to fund therecommencement of production at its second centre at Vammala in Finland.
Dragon said $22 million had been secured already through European and Australian investors.
Below is the full announcement:
DRAGON MINING ANNOUNCES $35 MILLION CONVERTIBLE NOTE ISSUE
The Board of Dragon Mining NL is pleased to announce that it will today lodge a prospectus for the
placement of $35 million via a secured convertible note issue, with a priority pool for existing small
shareholders of Dragon. Patersons Securities Limited, as Lead Manager to the Issue, have secured
commitments for $22m from European and Australian institutional and sophisticated investors with the
balance of the issue open to small Dragon shareholders and retail investors under the cover of the
prospectus.
The funds will be primarily used to recommence production from Dragons second production centre at
Vammala in Finland. This will involve the re-establishment of underground mine production from the
Orivesi Mine, the development of an open pit and underground mine at Jokisivu and
recommissioning of the Vammala plant that is currently on care and maintenance.
Funds will also be made available for incremental process improvements at Svartliden to provide
sustainable plant performance.
Importantly the board of Dragon has earmarked $8m for an active high impact exploration program largely
within trucking distance of its Svartliden and Vammala operations. Dragon believes their exploration
tenements are highly prospective with the potential to deliver short term results and substantially increased
resources with the prospect of expanding and extending the life of the existing company operations.
Campbell Ansell, the Dragon Chairman, commented that The board feels it is important in a rising gold
environment for Dragon to add value to shareholders through an active exploration program that will
complement and underpin the planned production growth and build long life operations.
A number of prospects have been identified in Finland for immediate drilling. Exploration at the
Companys existing Svartliden Gold Mine will involve testing extensions of the orebody and drilling
prospects within the mine corridor.
The securing of the funding will enable the Company to become a significant gold producer in the Nordic
region with a medium term objective of producing greater than 200,000 ounces of gold per year. Currently
the Companys intention is not to hedge any of the gold production from the Finish operations.
For further information in relation to the use of funds shareholders should refer to the investor presentation
on the Companys website and also to the Prospectus which will be lodged with ASIC on Friday 16
December 2005.
The $35 million capital raising comprises the issue of 33,500,000 convertible notes at an issue price of
$1.05. The key terms of the convertible notes are included on the attached schedule:
Issue Size: A maximum of 33,500,000 Convertible Notes to raise $35,175,000 before the costs
of the Offer.
The Minimum Subscription is the issue of 10,640,000 Convertible Notes to raise
$11,172,000 before the costs of the Offer.
Issue Date: For those Convertible Notes comprising the Minimum Subscription:
21 December 2005.
For those Convertible Notes in excess of the Minimum Subscription:
27 January 2006
Issue Price: $1.05 per Convertible Note.
Term: 5 years
Interest Rate: The interest rate on the Convertible Notes is fixed at 10.0% per annum and
accrues quarterly.
Interest Payment Interest is paid in arrears on each 30 June, 30 September, 31 December and 31
Dates: March until the Maturity Date to Noteholders on the register as at the Record Date,
unless the Convertible Note is earlier redeemed or converted in accordance with
the Terms of Issue.
Conversion Ratio: Each Convertible Note is convertible into 6 Shares subject to certain adjustments
in the event of bonus issues or a reconstruction of the Company's issued capital.
The adjustment requirements are set out in the Terms of Issue which includes
alterations to the Conversion Ratio to comply with ASX Listing Rules.
Conversion Dates: Conversion may occur at anytime at the Noteholders discretion, subject to
minimum criteria. The Noteholder may also chose to convert if an Early
Redemption Notice is given each as set out in the Terms of Issue, Notice of aTax
Event or a Takeover Event given by Dragon Mining to Noteholders. Early
Redemption Notices will be sent directly to Noteholders.
Conversion Notices once given by a Noteholder cannot be revoked.
Redemption: The Convertible Notes are redeemable at $1.05 at maturity.
The Company may issue an Early Redemption Notice quarterly after 31 December
2007, in which case the Noteholders may elect to convert their Convertible Notes
subject to early redemption into Dragon shares.
Security: The Convertible Noteswill have second ranking fixed and floating charge security
behind Macquarie Bank over all of Dragons assets, with the exception of the
Pampalo project and listed securities held by the Company.
Listing: Dragon Mining will apply for official quotation of the Convertible Notes on ASX
within 7 days after the date of this Prospectus subject to approval by ASIC of the
Company appointed , Perth based, Trustee.The Convertible Notes will not be
listed until after the close of the prospectus. If quotation is not granted or a trustee
not appointed the Convertible Notes over the minimum subscription will notbe
issued.
