Panoramic Resources Ltd (ASX:PAN) (FRA:YM1) (OTCMKTS:PANRF) securities returned to the bourse today after the company launched a $28.2 million capital raising drive designed to reduce debt levels by $20 million.
In a fully underwritten pro-rata renounceable entitlement offer, the company is offering two new placement shares to its investors for every 11 shares held.
Panoramic has priced the shares at 28 cents each, a 17.6% discount to the 34-cent last closing price before a voluntary trading halt in the company’s securities this week.
The 28-cent pricing is an 18.6% discount to the 10-day volume-weighted average price on Monday.
Panoramic confirmed the cap raise would “reduce the amount owing under the recently amended Savannah Facility Agreement (SFA) with Macquarie Bank Limited.
The company flagged it believed the funding required to meet the agreed reduction under the facility was “best sourced” with a capital raising.
Panoramic said, “The entitlement offer will provide all eligible shareholders with the opportunity to participate and retain exposure to the company’s 100%-owned Savannah Nickel Project as well as its portfolio of PGM [platnium group metal] assets, 51% shareholding in Horizon Gold Limited and other listed investments.”
The company said the cap raise would allow it to direct working capital to:
- A $20 million repayment of the Macquarie SFA — 50% of the drawn-down sum of the facility
- Supplement the revenue shortfall from lower than expected production from the remnant Savannah orebody
- Provide contingency for unexpected production delays
- Satisfy internal liquidity requirements
- Meet general corporate and capital raising costs
- The offer will be available to shareholders on the register next Tuesday, September 10, 2019, with investors able to on-sell their entitlements to other parties.
Major shareholder, Zeta Resources Limited will take its full pro-rata entitlement under the offer with this subscription of more than 33 million shares bringing in about $9.3 million.
Zeta has agreed to partly underwrite another 10 million shares to the tune of $2.8 million.
The amounts total 43% of the amount Panoramic hopes to collect.
Panoramic's offer will close on Wednesday, September 18, 2019, with new shares expected to be quoted on the ASX on October 1, 2019.
Capital raising to fund debt reduction
Panoramic aims to halve $40 million of debt funding provided by the Macquarie Group Ltd (ASX:MQG) (FRA:4M4) (OTCMKTS:MQBKY) subsidiary, which will reduce its senior debt to $20 million.
It has negotiated to pay the same interest on the sum as in a previous $10 million mezzanine tranche.
Loan-payback start date would be deferred one financial quarter to September 30, 2020, with the final repayment due on March 31, 2022, a quarter later than a prior agreement.
Production increases on the cards
Panoramic hopes to increase production at its flagship Savannah nickel-copper-cobalt operations in WA’s Kimberley region, updating guidance for the project earlier this week.
Savannah is a recommissioned nickel project that is exporting ore to China out of the port of Wyndham, in WA’s northwest.
The company’s production forecast for the 2019-20 financial year is 9,500 to 10,000 tonnes of nickel, 5,800-6,000 tonnes of copper and 600-650 tonnes of cobalt.
Panoramic has produced more than 2,484 tonnes of nickel, 1,474 tonnes of copper and 130 tonnes of cobalt in concentrate from the Savannah Nickel Project in the East Kimberley subregion since restarting operations.
The Perth company’s fiscal year sales income for 2019 was $39.6 million after the company started sending bulk concentrate shipments to China in February 2019.