Navigator plunges on $16m rights issue
Stuart McKinnon, The West AustralianJuly 9, 2012, 12:16 pm
tweet1 Email Print
The Bronzewing processing plant.
UPDATE 2.30pm: Shares in Navigator Resources have plunged after the struggling gold miner announced a deeply discounted, highly dilutive $16 million rights issue to save it from collapse.
The company announced today shareholders would be offered 7.2 new shares for every share they hold, priced at just 0.1 cents.
Major shareholders Au Mining and D&A Income will conditionally underwrite the renounceable rights issue with Au Mining agreeing to amend the terms of a financing facility, which will allow Navigator to access up to $13 million in funds.
The underwriting agreement is subject to approval by the Foreign Investment Review Board.
Navigator said the funds raised in the rights issue would enable it to repay funds drawn down from the $13 million finance facility and for the development of the Cockburn Pit at its troubled Bronzewing gold project.
The company admitted that despite a strong prevailing gold price, it had been unable to lift production performance at Bronzewing to a level whereby revenue from weekly gold sales exceeded the company's costs.
"Consequently, despite the commitment of significant investment capital over the past two years, Bronzewing, and by extension, the company, has been operating on a negative cash flow basis," Navigator said in a statement.
It said asset sales and other debt and equity fund raising options had failed to materialise.
"Given the distressed financial position of the company, the board deemed that the only viable alternative available to ensure the company's continuation as a going concern was to enter into the finance facility and to proceed with the rights issue," Navigator said.
It admitted voluntary administration was the only other alternative.
The gold miner has been struggling with production problems, high costs and low grades at Bronzewing since it recommenced mining at the project which it bought from the administrators of View Resources in 2009. Navigator shares, which have been in suspension since May, rejoined the boards today and fell 0.5 cents, or 62.5 per cent, to close at 0.3 cents. Quelle thewest
|