West Perth-based exploration company Western Metals Ltd will raise $25 million through a placement and share purchase plan, the company announced today.
West Perth-based exploration company Western Metals Ltd will raise $25 million through a placement and share purchase plan, the company announced today.
Western Metals said in an announcement the capital raising would bring company cash reserves to $29 million, which it said would facilitate business development and more agressive exploration of the company's tenements in Tanzania, Australia, Peru and the USA.
The company will raise $17 million through the placement of 70.8 million shares at 24 cents to clients of Tricom Equities Ltd, as well as attaching options distributed on a one-for-one basis at 35 cents, to expire on April 30, 2010.
Western Metals will also offer 38.1 million shares at 21 cents each to current shareholders, raising up to $8 million. If oversubscribed, entitlements will be determined on a pro rata basis and the balance of subscription money will be returned to shareholders.
In addition to the capital raising, the company has announced plans to sell all unmarketable share parcels - those worth under $500 - to reduce the administration costs they cause.
Holders of these share parcels will be informed of a company plan to sell their stake following the SPP, in which they are invited to participate.
However, shareholders who wish to keep their shares can elect to do so.
The full text of a company announcement is pasted below
The Board of Western Metals Ltd (ASX: WMT) is pleased to announce a $25 million capital raising to support the funding requirements of the company's portfolio of exciting exploration projects for the coming years.
"This capital raising is a significant step forward for Western Metals as the company continues the implementation of an aggressive exploration program. All of our projects have comprehensive ground based activities planned and in progress and we now have the funding in place to ensure these activities maximise the probability of success. This funding also gives us the ability to accelerate successful programs at the company's discretion," Managing Director George Bauk said.
A placement of $17 million worth of shares at 24¢ per share will be made to clients of Tricom Equities Limited. This will see 70.8 million shares at 24¢ placed with an attaching one for one listed option with a strike price of 35¢, expiring 30 April 2010.
The capital raising program is subject to Shareholder Approval, with a Shareholder General Meeting to be held in early May.
"This placement demonstrates confidence in our people, our projects and our business plan. Western Metals has a detailed work programme in place to utilise these funds through in-ground exploration," Mr Bauk said.
The company is offering current shareholders the opportunity to increase their holdings through a SSPP. Under the SSPP, shareholders will each be able to purchase;
- 23,500 shares at 21¢ costing $4,935 or
- 14,000 shares at 21¢ costing $2,940
The SSPP will raise up to $8 million through the issue of up to 38.1 million shares at 21¢, taking the total amount raised to $25 million. The SSPP price has been set at the maximum 20% discount to the 5 day value weighted average price ("VWAP") of 26.26¢
between 17 March and 22 March 2007. The SSPP is not underwritten.
Critical Dates for SSPP
- Ex-entitlements 30 March 2007 (ASX close of trade)
- Record Date 4 April 2007 (17.00 Perth time)
- Dispatch Date (est.) 5 April 2007
- Closing Date 27 April 2007 or on receipt of $8 m, whichever is first
This schedule means that, taking into account T+3, members of the public will need to purchase shares prior to close of trading on 30 March 2007 to be on the company's share register in time to participate in the SSPP.
The SSPP is capped at $8 million. If the SSPP is oversubscribed, entitlements will be determined on a pro rata basis and the balance of subscription money will be returned to shareholders.
"The Board and management of Western Metals recognise the significant support the company has received from its shareholders, and we see the SSPP as an opportunity for the company to ensure the shareholders continue to have the opportunity to benefit from
our excellent portfolio of exploration projects," Mr. Bauk added.
Unmarketable Parcels
Western Metals currently has over 6,000 shareholders with less than $500 worth of shares. The servicing of these shareholders imposes significant administration costs on the company.
During the capital raising process, Western Metals will offer all shareholders the opportunity to participate in the SSPP and purchase a parcel of $2,940 or $4,935 worth of shares.
Following the SSPP, Western Metals will then issue a notice to shareholders that still hold less than $500 of shares that it intends to sell their shares (at no cost to them). Shareholders with less than $500 of shares who wish to have their shares purchased are to do nothing. Shareholders who wish to keep their shares can elect to do so.
