05/06/2015 - 14:12

Hazelwood to raise funds for ferrotungsten project

05/06/2015 - 14:12

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Perth-based ferrotungsten miner Hazelwood Resources has kicked off a $12.8 million capital raising to repay debt and expand production at its ATC joint venture facility in Vietnam.

Hazelwood to raise funds for ferrotungsten project
Hazelwood Resources' ATC ferrotungsten project in Vietnam.

Perth-based ferrotungsten miner Hazelwood Resources has kicked off a $12.8 million capital raising to repay debt and expand production at its ATC joint venture facility in Vietnam.

The company will undertake a nine-for-10 entitlement issue to raise up to $11.6 million at an offer price of 1 cent per share, with a minimum subscription amount of $6.5 million.

It will also seek to raise a minimum of $1.25 million through an issue of convertible notes to sophisticated and professional investors.

The notes will be convertible into fully paid ordinary shares in Hazelwood at a conversion price of 0.5 cents each.

In a statement, Hazelwood said the purpose of the recapitalisation was to repay its $US4 million debt facility with Siderian Resource Capital, as well as other creditors, and for working capital for operations at its 60 per cent-owned ATC ferrotungsten plant in Vietnam.

“The board has resolved that the recapitalisation is the best option available to discharge the Siderian facility within the required timeframe and ensure the company is capitalised to realise the value of our ownership in the ATC plant,” executive chairman Mark Warren said.

“A successful recapitalisation will enable Hazelwood to resume and expand production at ATC, and advance development of Hazelwood’s Australian tungsten mineral projects.”

He said the proposal provided Hazelwood shareholders with an opportunity to participate in the recapitalisation and maintain exposure to the company’s ownership in ATC.

GMP Securities and Hartleys were appointed as joint lead managers to the raising.

The company also said it had been in negotiations with a number of other corporate entities that were experienced in the tungsten sector, and there was potential for one or more of the parties to further enhance the proposed recapitalisation as a cornerstone investor or future partner.

It also said 2015 had been more stable than last year and had a promising outlook for ferrotungsten.

“Importantly for Hazelwood and ATC, our feedstock prices have fallen to a greater extent than our ferrotungsten product in percentage terms, resulting in improved margins,” the company said.

“The company now plans to undertake a number of production runs throughout the recapitalisation period, with further ramp-up to follow upon completion of the capital raising.”

Hazelwood shares have been suspended from trade since December.

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