23/12/2010 - 12:47

Poseidon in $20m conv. notes deal

23/12/2010 - 12:47

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Poseidon Nickel has raised $20 million through an issue of convertible notes to Phil Falcone's New York-based investment group Harbinger Capital, which has backed several emerging WA mining companies.

Poseidon in $20m conv. notes deal

Poseidon Nickel has raised $20 million through an issue of convertible notes to Phil Falcone's New York-based investment group Harbinger Capital, which has backed several emerging WA mining companies.

The funds will be used to support development of the Windarra nickel project and for exploration activities.

In addition, Harbinger has agreed to extend the terms of $15 million worth of convertible notes issued in June 2008.

 

Company announcement below:

Poseidon Nickel Limited has secured a US$20M Convertible Note funding facility from two private investment funds managed by New York based Harbinger Capital Partners LLC and its affiliates. The funds will enable the Company to progress its 100%-owned Windarra Nickel Project, as well as ongoing exploration activities and feasibility studies.

The Convertible Notes, which are subject to shareholder approval, are convertible at the Harbinger Funds' election into fully paid ordinary Shares at a fixed price of AUD$0.30 per Share, which represents a significant premium of circa 42%, to the 30-day Volume- Weighted Average Price (VWAP) of Poseidon Shares. The Notes have a 6 year term and carry a coupon of 0% per annum for the initial 3 years and 5% thereafter.

Poseidon's Chief Executive Officer, Mr David Singleton, said the high premium reflected the Company's quality nickel assets and high prospectivity of the region.

"The issue of these Convertible Notes forms a major pillar of our strategy towards near term production at Windarra, as well as exploration and development of our numerous prospects at the greater Windarra Nickel Project," said Mr Singleton.

"The terms of the funding package represent good value for our shareholders and will enable us to work towards progressing the historic Windarra project into production.

Harbinger Chief Executive Officer, Mr Philip Falcone, said Poseidon has a first class Board and management team and is well poised to develop Windarra into an effective and profitable sulphide nickel project. "We are pleased to be able to reaffirm our commitment to this project."

"The Windarra Nickel Project has surpassed all of our investment criteria fundamentals and delivers an excellent entry point in the strengthening nickel industry," Mr Falcone said.

"Windarra is one of Australia's largest undeveloped nickel sulphide resources and the Company has demonstrated a commitment to move the project quickly into production."

Uses of the funding

The proceeds of the issue of the Convertible Notes will be used to fund the following activities:

- Complete the de-water and refurbishment works at the Mt Windarra nickel mine with commencement to take place in early 2011;
- Significantly expand the drilling program at Mt Windarra, Cerberus and the South Windarra prospects to increase resources and reserves; and
- Pursue the proposed concentrator funding.

Major Terms of the Convertible Notes

- Capital raised US$20M
- Unsecured
- 6 year term
- Notes are convertible by Harbinger into fully paid ordinary Shares at AUD$0.30 per share
- Coupon of 0% for 3 years and 5% thereafter

In addition, Harbinger has agreed to extend the term of the existing $15M Convertible Notes issued in June 2008 to two other private investment funds managed by Harbinger for a further 6 years with the same coupon terms as the new Notes issued to the two newly investing Harbinger Funds. The existing 2008 Notes will, under the agreement, have a conversion price of A$0.40.

The capital raising is subject to shareholder approval at a general meeting, details of which shareholders will be advised once the Notice has been finalised and approved.

An Independent Experts Report will accompany the Notice of Meeting and will contain full details, including the Terms and Conditions.

 

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