Iron ore miner Territory Resources has moved to beef up its balance sheet for a new phase of growth through a debt to equity conversion deal with Hong Kong-based Noble Group and separate capital raisings.
Under the terms of the deal, Territory will convert the USD 20.9 million it owes to Noble into equity at 31.5 cents a share, boosting the commodity trader's stake in the miner from 28.9% to 43.24%. The deal is subject to a binding agreement between the two companies and shareholder approval.
Territory's said it would also commission an independent expert's report to determine whether the debt conversion was fair and reasonable to shareholders of the Company not associated with Noble.
The company also plans to raise USD 2.5 million in a placement to one of its other major strategic shareholders DCM Decometal at the same price.
Territory said it would seek shareholder approval for the placement to the Austrian commodities trading house, which currently holds a 10.6% stake in the company. The miner would also launch a share purchase plan to raise as much as USD 23.9 million.
Retail shareholders would be given the chance to buy up to USD 10,000 worth of new shares at 20 cents a share. The company said that "If the combined capital raisings and Debt Conversion proceed, Territory will be left with a strong balance sheet and robust cash flows to aggressively support ongoing exploration and resource development through product beneficiation and acquisition programs.”
Mr Andrew Simpson chairman of Territory said the deal and capital raising would completed the repositioning of the company. He said that "Over the past two years we have engineered an operational turnaround which has enabled us to significantly reduce our core debt and extend our resource and reserve base. We will be ready to move to a new level of growth and development as a result of these transformational transactions. This growth scenario will specifically concentrate on a much more aggressive exploration and product beneficiation program to ensure the maximized use of the excellent infrastructure assets under the company's control."
Mr Simpson said the cash would also offer the company the opportunity to invest in alternative projects.
(Sourced from thewest.com.au)
