Troubled gold miner Blackham Resources has taken another step towards its recapitalisation with its main contractor MACA providing a $14.3 million loan to help it out of its short-term cash crunch.
The MACA loan will enable Blackham to pay its financier Orion for a $14.8 million debt repayment which was due at the end of last year.
Orion, MACA and former contractor Pybar have also agreed to jointly sub-underwrite a $36 million rights issue to the value of $13 million, which will be arranged and underwritten by broker Hartleys.
Blackham’s non-executive turned executive chairman Milan Jerkovic has also agreed to sub-underwrite the offering to the tune of $500,000.
The gold miner announced this morning the rights issue would be priced at just 4c, a discount of more than 50 per cent to its last traded price of 10.5c. One 8c option will also be issued for every two new shares shareholders take up.
Blackham also announced this morning that former Resolute Mining chief financial officer Greg Fitzgerald would join the board as a non-executive director.
Mining engineer and MACA board member Linton Kirk would be appointed to a new technical advisory committee along with experienced geologist Jonathan Lea.
The company also advised it had produced 3294oz in the past two weeks, a fortnightly record for the company.
Mr Jerkovic said the refinancing of the Orion term loan, together with the alignment of key stakeholders, marked a significant milestone which would allow it to move forward with the final stage of its recapitalisation strategy.
“This will ensure that Blackham is well funded with a strong balance sheet to enable it to focus initially on a simple free milling mine plan at its Matilda-Wiluna Gold Operation as it transitions to a period of stable gold production, having recently accessed high grade ore zones, delivered record gold production and achieved a step-change in project economics,” he said.
“The company plans to repay the remainder of its Orion facilities and normalise working capital using internally generated cash flows by the end of 2018, targeting a net-cash position by the end of the calendar year, whilst continuing exploration aimed at lengthening and improving the free-milling mine plan.”
Blackham’s 6.5Moz Matilda-Wiluna operations were bleeding cash last year because of high strip ratios, a lack of access to high-grade ore resulting in high operating costs but the company says the project is now “transitioning to stable production and strong operational cashflow”.
Shares in the company were suspended before Christmas after Sydney-based private equity outfit Pacific Road Capital pulled out of a $60 million funding package initially flagged in November.
The withdrawal meant the company did not have the cash to meet a $14.8 million debt repayment due on December 31.