APEX Minerals is raising funds for the fifth time in 18 months to finance a new effort to get its Wiluna goldmine in Western Australia humming.
The stock has gone into a trading halt while it beds down a planned $100 million rights issue that will allow it to pay off $50 million in debt and keep $50 million in cash to fund a new operating plan for Wiluna.
Under the plan, Wiluna could eventually emerge as a 140,000 ounce-a-year gold producer from multiple ore sources on the Wiluna goldfield, as well as the high-grade Wilsons gold deposit at Gidgee, 120 kilometres from the Wiluna treatment plant.
Since acquiring Wiluna from Oxiana in June 2007 for $29.5 million, Apex has struggled to meet its initial production target at the operation of 120,000 ounces a year. Most recently, adverse ground conditions in the Calais ore body at Wiluna at a time of limited alternative options put Apex's production target and cash-flow targets under pressure.
The new funding will allow Apex to increase its ore sources at Wiluna from one to four zones, with the inclusion of Wilsons enabling overall gold production to be increased from the original 120,000 ounce-a-year target.
The latest fund raising is said to have the support of Apex's key shareholders and Goldman Sachs JBWere, the group that lined up more than $60 million in funding for Apex from the issue of secured notes and warrants in September 2008.
Before that, Apex raised $62 million from a placement of shares in March 2008 at 85¢ a share. More recent raisings have not been at such fancy prices. A $19.6 million placement last January was done at 27¢ a share and a $28 million placement/rights issue in May was done at 20¢ a share. The latest raising will be at a lower price again, given that the stock last traded at 9.8¢ a share.
In June, GS JBWere valued Apex shares at 52¢ each. But that was before the ground-control problems at Calais.
Apex's longer-term plan is to become a 200,000 ounce-a-year gold producer at Wiluna but with ore feed for the treatment plant supplemented by ore trucked in from the Gidgee and Youanmi goldfields.
Source: The Age
AXM Price at posting:
7.9¢ Sentiment: Hold Disclosure: Held
