Fotios lifts Horseshoe stake

Shares in West Perth-based junior Horseshoe Metals have soared after the company outlined plans to raise $2 million through a placement and rights issue in a deal with investor Michael Fotios.

Horseshoe told the market it had entered into placement and subscription agreements with Mr Fotios, who is a non-executive director of the company, to raise $630,000 via the issue of about 20.6 million shares at 3 cents each - double the price at which Horsehoe last traded before entering a trading halt last week.

Mr Fotios may elect to subscribe for an additional 13.8 million shares, worth about $275,000, by participating in a separate rights issue, with Horseshoe aiming to raise about $1.1 million through a two-for-three non-renounceable rights issue at an issue price of 2 cents.

Mr Fotios, together with his associates, currently holds about 17.6 per cent of the company's shares and may increase his stake to more than 20 per cent as a result of the proposed transactions.

Under the terms of the agreements, Whitestone Minerals - a company associated with Mr Fotios - will carry out drilling work to the value of $235,000 in exchange for the issue of shares at 2 cents.

A debt for an additional $65,000 for previous drilling work completed by Whitestone will be satisfied by the share issue.

Creditors to whom $200,000 is owed will also receive shares at 2 cents each in satisfaction of their debt.

The Horseshoe board will be reconstructed at the completion of the equity raising to comprise Mr Fotios, managing director Neil Marston and a third member who will serve as technical director.

Non-executive directors Jeremy Shervington and Stuart Hall will resign and Mr Marston will assume the role of company secretary, replacing Damian Delaney.

Horseshoe said the funds would be used for drill testing of exploration targets at its Kumarina and Horseshoe Lights copper and gold projects north of Meekatharra.

Azure Capital has been appointed as lead manager to the rights issue.

Horseshoe shares soared on the deal, closing 40 per cent higher at 2.1 cents.