News: Metminco to raise up to A$4mln as deal talks continue

Metminco (ASX:MNC, LON:MNC) has revealed plans to raise up to A$4mln through the issue of new shares.

The company has already agreed the placing of A$1mln (£500,000) worth of shares, and also said it will offer up to A$3mln of new shares to existing shareholders via a rights issue.

Cash raised is earmarked for the completion of the preliminary economic assessment for a proposed high-grade ‘starter’ mining operation at the Los Colatos project.

It will also provide working capital as the group works to secure mining access rights at the Mollacas project.

Metminco told investors it has also been in talks with third parties over a potential deal for a “near term cash flow asset”, though it cautioned that these discussions may not result in a transaction.

"The funds raised from the placement and rights issue will allow the company to complete due diligence on two potential near term cash producing assets as well as complete a PEA at Los Calatos,” said managing director William Howe.

“The PEA is an important step towards advancing Los Calatos, a designated Project of National Interest, by assessing the economic viability of a smaller, high grade, starter mining operation that focuses on the higher grade copper and molybdenum zones.”

Howe added that cost cutting measures are continuing.

Broker RFC Ambrian arranged the placing which will be carried out in two phases. Initially 75mln shares will be issued, at a price of 0.6 cents (0.3p), while a further tranche of 103.8mln shares will be subject to shareholder approval.

Shares issued in the first tranche are expected to begin trading on AIM on February 20. An extraordinary general meeting is scheduled for March 24, and the new shares would join AIM by late March.

The rights issue proposes investors can purchase one new share for every 3.25 Metminco shares they own. The subscription price will be the same as the placing price.

It is anticipated that the rights issue will be available to shareholders from March 4.