05/05/2014 - 10:55

Forrest backs Energy and Minerals Australia

05/05/2014 - 10:55

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Andrew Forrest has emerged as a surprise backer of Energy and Minerals Australia, taking a major stake in the Perth-based uranium explorer through a much-needed $12 million investment. EMA has also struck a debt-for-equity swap with its noteholders.

Forrest backs Energy and Minerals Australia

Andrew Forrest has emerged as a surprise backer of Energy and Minerals Australia, taking a major stake in the Perth-based uranium explorer through a much-needed $12 million investment.

EMA has also struck a debt-for-equity swap with its noteholders. The related transactions will leave existing shareholders retaining just 28 per cent of the company.

EMA will issue 400 million shares at 3 cents each to Forrest Family Investments Pty Ltd, an entity within Mr Forrest's Minderoo Group, which encompasses his private business holdings and philanthropic work.

One free unlisted option, exercisable at 5 cents, will be attached to each placement share.

Forrest Family Investments is expected to hold a stake of almost 28 per cent in EMA upon completion of the transaction; that would roughly double if the Forrest company was able to exercise its 400 million options.

The Fortescue Metals Group chairman has a long working history with EMA's senior management.

EMA's chief operating officer and former managing director, Julian Tapp, served as FMG's head of government relations until September 2012, when the iron ore giant shed hundreds of jobs in response to a big fall in the iron ore price.

Its chief executive, Mike Young, meanwhile came to fame as the managing director of mid-tier iron ore miner BC Iron, which struck an historic third-party infrastructure access deal with FMG in 2011.

Mr Forrest said the investment represented a strong vote of confidence in EMA's management team.

The company's noteholders have meanwhile agreed to the conversion of $24.5 million in debt to shares in EMA, taking their combined stake in the company to more than 44 per cent.

Acorn Capital and Macquarie Bank will receive shares at an issue price of 3.8 cents to repay $3.6 million worth of promissory notes and convert convertible notes held in the company.

The transaction is subject to shareholder approval at an extraordinary general meeting expected to be held in July.

The announcement of the deal comes after a near month-long suspension from trading for EMA, which previously signalled it had been unable to complete a proposed capital raising within its initial given timeframe.

EMA is pursuing development of its Mulga Rock uranium project in the north-east Goldfields, with first production targeted by the end of 2016.

Its latest quarterly report to the ASX revealed the company has just $1.9 milion cash at the end of March, and only after borrowing $2.6 million during the quarter.

In its first trade since early April, EMA shares were 8.7 per cent higher at 5.0 cents at 10:51am WST.

The stock has spent the past year trading mostly between 3.5 cents and 5.0 cents per share.

 

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