News: Kasbah Resources has institutional support for $3M share placement

Kasbah Resources (ASX:KAS) is raising about $3 million through a placement of shares to its major shareholders to fund the interim development strategy for its Achmmach Tin Project in Morocco.

It has received commitments for approximately 104.6 million shares priced at $0.029 each.

Notably, this received strong support from two of largest shareholders with African Lion Fund increasing its interest to 16.1% while the International Finance Corporation will retain its position as the largest shareholder with about 17.7% of the company.

Thailand Smelting and Refining (Thaisarco) Smelting and Refining, the world’s fifth largest tin smelter, will become a substantial shareholder with a 5.6% interest while major physical commodity trader Traxys will increase its shareholding to about 5.3%.

The support from major shareholders and major tin industry participants highlight the industry’s need for new long term, sustainable tin supply.


Interim Development Strategy

Along with a decision to defer mandating commercial debt, Kasbah has adopted an interim development strategy. This strategy incorporates:

- Completing pre-development environmental and social requirements of the International Financial Corporation;
- Undertaking pre-engineering design for the new power line required to service Achmmach;
- Continuing low cost exploration in Morocco and pursue other joint venture opportunities;
- Protecting and preserving the value of Achmmach during this period of commodity volatility; and
- Investigating alternative opportunities to enhance shareholder value.
In March, the company released an Enhanced Definitive Feasibility Study that improved the project economics of Achmmach.

Critically, C3 production cost fell to US$13,296 per tonne of tin in concentrate, confirming the potential of Achmmach to be a long life, low cost tin producer.

Tin is currently trading in a range of approximately US$14,700 to US$15,900 per tonne.

The base case also estimates pre-production capital of US$148 million, post-tax NPV of US$171 million, IRR of 32.9% and a 2.3 year payback period.


Cost Reduction

The company will immediately commence making further changes to implement a series of cost reduction initiatives to preserve capital including:

- Reducing the number of directors down to four from five members;
- Reduction in board fees;
- Reduction in management remuneration;
- Reduction in expatriate operations personnel and site staff;
- Suspension of short term incentive (STI) program for all staff; and
- Reduction in corporate overheads.

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