Titanium Resources to raise 11.4 mln to repay part of Sierra Leone govt loan
Titanium Resources Group Ltd (LON:TXR) announced a cash placing by Mirabaud Securities LLP of 113,660,925 new shares at a price of 10 pence per share to raise approximately £11.4 million, or €13.4 million.
The group is in the process of changing its name to Sierra Rutile Limited (SRL).
Approximately €13 million from the proceeds will be used to fund the repayment, by its subsidiary undertaking, SRL, of a portion of the principal and interest outstanding pursuant to the loan to SRL from the government of Sierra Leone.
The repayment will cut the group’s overall current debt by approximately 36 percent and significantly reduce ongoing interest and principal repayments due. As a result of this, the company expects to benefit from increased free cashflows from its operations which would put it in an improved position to invest in and develop its business.
Prior to Titanium Resources’ AIM admission in August 2005, in order to fund the restart of SRL, it agreed a Euro denominated loan from the government of Sierra Leone under a programme funded by the European Commission.
The board believes that it is now appropriate to repay a proportion of the principal and accrued interest of the loan in order to improve the financial position of the group.
The move will reduce the group’s total outstanding debt from €36.5 million to €23.5 million and will free-up substantial cashflows of approximately €14.7 million through to June 2013 which could be reinvested in the business to improve production efficiency or volumes.
Furthermore, Titanium Resources is currently in negotiations with the government in regards to the sequencing of future repayments of principal due under the loan. Should these negotiations be successful, the company would not be required to make any further repayments of the principal until 2013.
The company operates the Sierra Rutile mine in Sierra Leone through its subsidiary SRL and produces rutile and ilmenite for use in industrial applications.
Chief executive John Sisay said: “The market for our products remains strong and I am confident in the long-term prospects of the company. Our focus now is on achieving a significant improvement in operating reliability whilst we assess the optimal strategy for boosting production.”
The mine has an estimated JORC-compliant total mineral resource of just over 600 million tonnes at a 0.8 percent rutile cut-off grade. Of this, 4.4 million tonnes are in the measured category, 436.6 million are in the indicated and 163.9 million in the inferred category.
by Andre Lamberti, Proactive Investors, UK
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