www.iii.co.uk/articles/75355/...seals-£10-million-funding-deal
Forte Energy seals £10 million funding deal
By Darshini Shah | Fri, 15/02/2013 - 09:53
Shares in Forte Energy (FTE) slipped 5% as it announced that it had entered into a £10 million equity financing facility (EFF) with Darwin Strategic, a majority-owned subsidiary of Henderson Global Investors' Volantis Capital.
The EFF agreement will provide Forte with a facility of up to £10 million, which, subject to certain restrictions, can be drawn down at any time over the next three years.
"This new £10 million facility gives Forte Energy access to efficient, cost-effective financing, as needed," the company stated, pointing out that the facility could be used "entirely at [its] discretion". It added that the EFF would allow the company to maximise the value of new and existing opportunities, while considerably reducing future financing risk.
In return, Henderson Volantis can invest directly via a drawdown.
Forte Energy is an Australia-based minerals company focused on the exploration and development of uranium and associated by-products in Mauritania and Guinea in West Africa. It has an extensive pipeline of assets and total Joint Ore Reserves Committee (JORC) resources of 76.8 million tonnes (Mt) at 266 parts per million triuranium octoxide, a compound of uranium.
The company's flagship assets are the A238 prospect and the Bir En Nar project in Mauritania, and the Firawa Project in Guinea.
Analyst view
"Given Forte's liquidity, with traded volumes higher than its peers, this is a very useful facility to have and allows the company to build up its institutional sharebase alongside strategic partner Areva," commented analysts at broker FoxDavies.
Interactive Investor view
Trading in Forte Energy's shares is currently suspended in Australia pending news of a potential corporate transaction which should be clarified next week.
Users of Interactive Investor's discussion boards were pleased to hear that the EFF was not the reason for the shares being suspended.
'Naughtyneil' pointed out: "The good news to me is that financing is secured with Australia's biggest investment house. Funds available at FTE's request, as and when needed. Far better than the discounted placing that some of us were worried was the reason for the suspension."
Fellow user 'FewChores' added: "No more dilution and heavily de-risked now. Enough cash support for several seasons drilling. As and when needed - I like that. Good news on a basic level. Your investment here is now much safer. This is the first part of news. Results should galvanise us further.
"And let's hope the deal is pulled off, and big."
