Heemskirk Consolidated Limited

Published : December 14th, 2015

Debt Funding CPs to be satisfied by equity raising

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Keywords :   Australia | Debt | K Street | Market | New Zealand |

Debt Funding CPs to be satisfied by equity raising

688b93a3-5797-4ee7-9963-cdd1aeb163a2.pdf


HEEMSKIRK

Announcement


15 December 2015


Debt funding conditions to be satisfied by equity raising


For further information, please contact:


Peter Bird Managing Director


Heemskirk Consolidated Limited ABN 18 106 720 138

Level 17

303 Collins Street

Melbourne Victoria 3000 Australia


Telephone: +61 3 9614 0666

Facsimile: +61 3 9614 4466 Email: [email protected]


This information is available on our website at www.heemskirk.com


Peter Bird Managing Director

  • A$10 million (approximately) capital raising


  • Construction capital estimate increased by 14%


  • Ungeared Project NPV C$78 million (AUD 33 cps pre-raising^)


The Moberly Project capital estimate has increased due to subcontractor pricing variations and fluctuations in the timeline and exchange rates. The capital price is now US$26.6 million*; up 14% on the previous estimate. The project construction timeline is estimated to be 14 months.


The variation in the capital estimate, conditions precedent, additional requirements and working capital needs through to the post commissioning phase have necessitated a A$10 million (approximately) rights issue which is fully underwritten.


As announced on 15 July 2015, the funding package from Taurus Funds Management is broken into two tranches:

  • Tranche 1: US$25m to complete the 300,000 tpa construction and production development project (Stage 1)


  • Tranche 2: US$15m to complete an expansion of the project (Stage 2) to a 600,000 tpa production level, once phase one has been successfully completed.


Project and market financial metrics have changed slightly with the project NPV7.5% now C$78 million compared to C$82m previously announced (announced 23 February 2015).


^ post raising AUD 14 cps

* price may vary due to foreign exchange fluctuations




Sources of funds

A$m

US$m

Uses of funds

A$m

US$m

Cash and Portfolio

Investments (30

November 2015)


6.8


4.8

Moberly Project

construction contract


33.2


23.9

Rights Issue

10.0

7.2

Moberly Project other capex*

3.7

2.7

Taurus Facility (stage 1)

34.7

25.0

Working capital funding^

8.2

5.9

Cash on balance sheet#

6.4

4.5

Total sources of capital

51.5

37.0

Total uses of capital

51.5

37.0


  • costs associated with mine haul road construction, engineering and insurances

    ^ includes mining and hauling costs

    # to fund working capital requirements beyond commissioning of Stage 1 of the plant and to advance the engineering design work on Stage 2 expanded production case of 600,000tpa


    Project Metrics - Key Assumptions: Stage 1 Development


    The following provides a breakdown of the key project metrics for Stage 1 development:


    • Nameplate production output capacity - 300,000 metric tonnes


    • Recoveries in appropriate frac sand product size range of approximately 75%


    • Capital costs with contingencies - US$26.6m


      • Plant construction US$23.9m


      • Other US$2.7m


    • Funding Stage 1 - US$25m


    • Project Free Cash Flow Undiscounted annual average - C$11.2m


    • Ungeared Project Internal Rate of Return Stage 1: 33%


    • Current C$/US$ exchange rate is 0.75


    • Payback Period Stage 1: 2.9 years



    • Project NPV is C$78m for Stage 1*


    • Estimated time to completion of construction 14 months


    • Customer demand remains


    • API specification frac sand product


    • Defined in situ JORC Reserve is more than sufficient to satisfy current 20 year mine plan


    • Appropriate permits in place


    • The Project has an estimated terminal value of up to $360 million assuming Stage 1 construction only


Fully underwritten Rights Issue


The rights issue will offer eligible shareholders the opportunity to subscribe for 10 new shares for every 7 shares held on 21 December 2015 at an issue price of $0.03 per new share to raise approximately A$10 million ("Rights Issue").


Below is a summary of the key terms of the Rights Issue:



Type of Offer

Renounceable Rights Issue.

Issue Ratio

10 New Shares for every 7 Shares held.

Issue Price

$0.03 per New Share.

Eligible Shareholders

Shareholders who have a registered address in Australia and New Zealand may apply for New Shares under the Rights Issue. Ineligible Shareholders may not subscribe for New Shares under the Rights Issue. However, the Company has appointed Morgans Corporate Limited as nominee to arrange for the sale of Rights on behalf of Ineligible Shareholders.




* Using a Real Discount Rate of 7.5% (10.6% Nominal). The discount rate has been recently reviewed with the real WACC calculated at 6.37% and hence the chosen discount rate of 7.5% is regarded as being conservative. The Project model was independently audited with no material issue identified in model structure or inputs.


Depending upon valuation method used.




Capital Raised

$9,925,632 (before the costs of the Rights Issue).

Use of Funds

The purpose of the Rights Issue is to raise funds to satisfy the terms of the Debt Facility Agreement. The funds raised will be applied towards the development of the Moberly Project, including:

  • all supporting business activities

  • to initiate both engineering and capital design work on the stage 2 expansion of 600,000 tpa; and

  • the additional capital and working capital costs associated with the construction of the Moberly Frac Sand Project.

Discount

The Company's share closing price on 4 December 2015 (the last day a trade was recorded before the announcement of the Rights Issue) was $0.052. Therefore, the Issue Price of

$0.03 represents a discount of approximately 42% to this closing price.

New Shares to be issued

330,854,387 New Shares.

Shares on issue following Rights Issue

562,452,458 Shares.


Eligible Shareholders


Eligible shareholders have the following options available in respect of the Rights Issue. They may:


  1. take up all of their Entitlement;


  2. take up all of their Entitlement and also apply for additional New Shares under the Shortfall Facility;

  3. take up some of their Entitlement and subscribe for some of the New Shares in respect of their Entitlement; or

  4. sell all or part of their Entitlement prior to 8 January 2016; or


  5. not take up any of their Entitlement.

Read the rest of the article at www.noodls.com
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Heemskirk Consolidated Limited

PRODUCER
CODE : HSK.AX
ISIN : AU000000HSK9
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Heemskirk Consolidated is a gold development stage company based in Australia.

Its main asset in production is PAJINGO in Australia and its main exploration property is LOS SANTOS in Spain.

Heemskirk Consolidated is listed in Australia and in Germany. Its market capitalisation is AU$ 41.1 millions as of today (US$ 30.7 millions, € 27.5 millions).

Its stock quote reached its highest recent level on July 09, 2010 at AU$ 0.35, and its lowest recent point on March 18, 2016 at AU$ 0.02.

Heemskirk Consolidated has 562 640 000 shares outstanding.

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Corporate news of Heemskirk Consolidated Limited
1/27/2016Generic
1/19/2016Entitlement Offer Results and Shortfall
1/18/20162016 Notice of Annual General Meeting
1/18/2016Corporate Governance Statement & Appendix 4G
12/23/2015Renounceable Rights Issue - Dispatch of Offer Document and E...
12/15/2015Letter to Shareholders
12/14/2015Debt Funding CPs to be satisfied by equity raising
12/14/2015Annual Statutory Update of Resources and Reserves
12/14/2015Offer Document
8/18/2015Appendix 3B Rights Issue
8/14/2015Entitlement Offer Results & Shortfall
7/30/2015Renounceable Rights Issue - Dispatch of Offer Document and E...
7/27/2015Cleansing Statement - Exercise of Options
7/23/2015Appendix 3B - Placement
7/23/2015Letter to Shareholders
7/21/2015Appendix 3B - Rights Issue
7/21/2015Letter to Optionholders
7/21/2015Offer Document
7/21/2015ASX Announcement - Confirmation of Resource
7/17/2015Clarification Statement - Appendix 3B
7/16/2015Appendix 3B
7/16/2015Renounceable Rights Issue
7/15/2015Moberly Project Funding Package Finalised
7/15/2015Trading Halt Request
7/15/2015Appendix 3B
7/6/2015Appendix 3F
3/29/2015Convertible Debt Securities
3/29/2015Appendix 3B
3/24/2015Securities Trading Policy
3/2/2015Appendix 3Z
3/2/2015Appendix 3B
2/26/2015Heemskirk AGM Presentation 26 February 2015
2/23/2015Withdrawal of Resolution 2 - 2015 Annual General Meeting
2/22/2015Enhanced Process Recovery Impacts Moberly Project Valuation
1/19/20152014 Corporate Governance Statement & Appendix 4G
1/19/20152015 Notice of Annual General Meeting
11/3/2014Moberly Frac Sand Project
10/30/2014Update - Funding for the Moberly Frac Sand Project
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