Navigator forced to amend rights issue
STUART McKINNON, The West AustralianJune 27, 2011, 8:52 am
The West Australian ©
Struggling gold producer Navigator Resources has been forced to lower the price and amend the terms of its proposed $31 million rights issue.
The company has been forced to raise more cash to change its mine plan for the operation following ongoing production problems at its Bronzewing gold mine
Navigator plans to bring forward ore production from its Cockburn pit to focus on higher grade ore.
The company also announced it had renegotiated its $11.1 million debt facility with bankers RMB Australia to August 2, giving it time to begin repaying debt from the proceeds of the raising.
"As a result of these measures, Navigator will be in a strong financial position as it commences the build-up of Cockburn pit ore mining… after waste stripping of the first cutback commenced in late January," the company said in a statement.
Navigator expects to mine about 300,000 ounces of gold at an average grade of two grams per tonne from the Cockburn pit, with expected cashflow of about $100 million over the next three years.
"The main ore zone is expected to be accessed no later than in the second quarter of 2012, at which time the main cutback will have been completed, with strong cashflows expected thereafter," the company said.
Under the terms of the renounceable rights issue, shareholders will have the opportunity to subscribe for five new shares at four cents each for every three they already hold.
The original offer was priced at 6.8 cents a share on a one-for-one basis.
One free attaching option will be issued for every two new shares subscribed for.
Navigator needs to raise a minimum of $20 million from the rights issue but said the full $31 million would allow it to fully repay its debt, complete its Cockburn pit cutback and enable it to recommence its targeted exploration program.
The company said it expected to earn about $100 million from Cockburn over the next three years.
The rights issue is being managed and underwritten by Patersons Securities.
Navigator shares were off two cents, or 33.9 per cent, to 3.9 cents at 8.50am after returning from a trading halt.