Mining junior RNI says a number of recent cost-cutting measures included staff redundancies and salary cuts across the board, as the company announced a $26.5 million recapitalisation plan to pay off debt.
RNI said it will undertake an entitlements issue to raise up to $25 million, and will offer shareholders 2.5 new shares for every current share held, at a discounted 2 cents each.
It also plans to raise up to $1.5 million through an issue of unsecured convertible notes.
RNI is raising the funds to pay back its short-term $17 million debt facility with a fund managed by Taurus Resources, and develop its Grosvenor gold project north of Meekatharra.
It had previously signed a $60 million debt finance package with an undisclosed London-based fixed interest fund in March, but it fell through last month when RNI did not receive initial commitments.
Managing director Royce McAuslane said after considering a range of alternatives, the board believed the recapitalisation plan was the best option for the company to achieve its imperative of extinguishing the Taurus debt.
“As I have previously alluded to, the Taurus debt has been an obstacle in our discussions with the various financiers who have expressed interest in providing RNI with the project financing required to bring the Grosvenor project into production,” he said.
“We are confident that eliminating the Taurus debt via our recapitalisation plan will clear the way for RNI to successfully conclude those project financing discussions and get on with the job of developing Grosvenor.”
He said the company hoped the funds raised would give RNI an opportunity to launch a new drilling program at Grosvenor.
The company also said it had implemented a number of cost-cutting measures in order to keep its operating costs to a minimum.
It has reduced its staff, while board members, directors, management and retained staff have received salary cuts.
RNI said it will cost $38.2 million to bring Grosvenor into production, but believes mining can begin within nine months of project financing.
RNI shares lost 37.5 per cent of their value to 2 cents a share at 11:30am.
