c20 million equity financing in north america, page-2

Western Areas tops up kitty

Paul Garvey
Wednesday, 22 November 2006

ACQUISITIONS and a hedge-book restructure will be on the shopping list for new nickel miner Western Areas, which will fill its coffers to the tune of $C20 million ($A22.6 million) through an underwritten placement out of North America.

Western Areas managing director Julian Hanna, currently in London, told MiningNews.net this morning the placement would be carried out to both provide working capital and introduce more stock into North America, where he said Western Areas was attracting strong investor interest. Western Areas is listed on the Australian and Toronto stock exchanges.

Among the uses flagged for the fresh capital is further funding of the expansion underway at the company's recently commissioned Flying Fox mine, projects and corporate acquisitions, a restructure of the company's hedge position, and increased exploration drilling elsewhere in the Forrestania project that hosts Flying Fox.

On the acquisitions front, Hanna said the funds would go "primarily" towards the acquisition of up to 19.9% of Canadian-listed nickel play Mustang Minerals, as flagged by Western Areas last week.

"We think Mustang owns what will be the next nickel project that will come into production in Canada," Hanna said.

He added that the company was already working on a hedge-book restructure, aimed at deferring some of its short-term hedging commitments, with a revamped facility expected to be in place within a matter of weeks.

Hanna also added that the company had been interested in acquiring the tenement immediately next to Flying Fox from LionOre Mining International, but had not been able to beat the $A25 million offer for the project put forward by diversification-hungry zinc miner Kagara Zinc. Kagara announced its acquisition of the ground on Monday.

Hanna said he had had a "quick chat" with his new neighbour, Kagara executive chairman Kim Robinson, in the wake of Kagara's purchase.

"I'm sure we'll get along just fine," Hanna said.

The $C20 million placement will be made at $3 per share to clients of Sprott Securities and BMO Capital Markets, which are underwriting the offer. Each share will come with a quarter of a share purchase warrant exercisable at $4.

The underwriters will also have the option to purchase an additional $4 million Western Areas shares at $3 each.

Western Areas was among the sea of nickel stocks making the most of an overnight rise in the nickel price, posting a gain of A29c (8.1%) to sit at $3.89 in morning trade today.

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