Thursday, February 22, 2024

Blumont Copper in bid to get substantial stake in Discovery Metals

Discovery Metals will seek shareholder approval following its announcement that a deal is in place where BLUMONT Group through its Blumont Copper will invest millions of Pula in the Botswana listed copper mining outfit.
The move is part of the recapitalisation exercise drive by the company which operates Boseto Copper ProjectÔÇöwith part of the money expected towards repaying debt to lenders.
Under the deal, there will be a share placement of 15 percent new shares at AUD0.12 to raise approximately AUD 8.75 million and Blumont will also subscribe to USD100 million (about P 846 million ) 5 percent , 5 year convertible bond issue.
The proceeds from the transaction will be divided into USD25 million (about P 211 million) in repayment of the revolving credit facility, USD25 million (P211 million) in repayment of principal of the project finance facility; USD 5.5 million or P47 million (approximately) in payment of corporate advisory fees payable under the transaction and the balance for development, exploration and working capital purposes (to be agreed between the DML and Blumont.
Discovery Metals said it is planning to convene a meeting of its shareholders at which shareholders will be asked to approve the Bond Issue with details of the Shareholder Meeting to be advised in due course. The company currently expects the Shareholder Meeting to be held before the end of the year.
“The structure of the arrangement aligns the interests of Blumont and shareholders, and is expected to allow the company to reduce debt and deploy the additional funds to equity enhancing projects,” Managing Director, Brad Sampson said.
Sampson added that the partnership with Blumont and the additional technical skills that are expected to be added to the board by the appointment of Russell Luxford is expected to deliver significant benefit to the company.
“The restructured project finance facility, particularly the two year moratorium on principal and interest payments is planned to enable the company to deploy its available cash to initiatives directed at lifting shareholder value, including project enhancement initiatives and exploration activities,” he said.
Discovery Metals said it lenders have given in principle approval to the Restructure Terms. However, the approval is subject to formal credit committee approval and entering into formal documentation to reflect the Restructure Terms.
Discovery board has been keeping the mid night oil burning to secure recapitalisation funding following its refusal to sell the company to major shareholders Cathay Fortune Corporation (CFC), which owns 13.7 percent in the Australian company.
The company has since put up for ‘sale sign’ at the door and opened talks with a number of suitors in a bid to secure a change of control. The company has been moving around in a bid to refinance the Project Finance (PF) facility—a move which CFC declined to take part in.
“CFC declined to participate and subsequently announced in a public letter to shareholders that it would not support the raising of equity, preferring that the company should be sold via a competitive process in which it would participate,” said at the time.


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