rights worth taking up, page-3

Rights prospectus summary:

Overview
The main purpose of the Rights Issue is to raise funds for the Company's mining projects, principally to accelerate the development of the Kylylahti Copper-Cobalt mine and to advancing the Kuhmo Nickel project to feasibility stage.
Set out below is a brief description of the items to which the funds raised will be applied (as set out in the table below).
Costs of Rights Issue
−
legal costs;
−
fees payable to Pareto assuming completion of Shortfall placement; and
−
compliance and other incidental costs.
Kylylahti Copper-Cobalt project
−
3,000 metre deep drilling programme to lift resources and Reserves beyond 10 million tonnes;
−
acceleration of pre-development engineering, process guarantee testwork;
−
costs of ordering long lead time items of equipment for the processing plant;
−
Vulcan contributions towards the capital cost of the Kylylahti project, particularly the early commencement of site works and decline; and
−
financing arrangements for project development.
Kuhmo Nickel projects
−
5,000 metre drilling programme and follow up;
−
resource estimation, pit optimisation and definitive metallurgical testwork;
−
regional and deposit scale exploration; and
−
feasibility studies.


Other projects
−
review and evaluation, metallurgical testwork, scoping studies.
Corporate
−
repayment of the $2.5 million Macquarie Bank loan facility;
−
working capital; and
−
administrative expenses.
Use of Funds
The application of approximately $49,022,569 raised under the Rights Issue is summarised as follows:
Use of Funds
Amount ($)
Costs of the Rights Issue*
$1,797,800
Kylylahti Copper-Cobalt Project
$32,000,000
Kuhmo Nickel Projects
$7,500,000
Expenditure on other projects
$1,000,000
Corporate
$6,724,769
Total
$49,022,569

In my opinion, this money is being spent well and will mean the company is that much closer to generating a buck. Of particular interest is the acquisition of 'long lead time' items for the processing plant.

The DFS has not been published as yet - due next month. Obviously management are very confident of the outcome of the DFS.

Also note that we will have further upgrades to the Kylylati resource - as well as the Kumho Ni resource.

This rights issue is essentially a green light and with the publishing of the DFS and further resource upgrades I would expect a sp of >60c. Should go to >$1 with further significant Kumho upgrades. Interesting in the future when there are noises about the platinum group metals project.

Also note that VCN is essentially funding itself for this work (with the cost of share dilution) rather than going for a JV. This obviously means it keeps 100% of the profits - which is obviously a plus.