Tiger Resources (ASX:TGS) has raised approximately $20 million through a placement and has also sourced an additional US$25 million offtake prepayment facility for its Kipoi Copper Project expansion in the Democratic Republic of Congo.
This follows its decision to bring forward a number of capital expenditure items currently budgeted in Phase II and Phase III of the SXEW expansion program.
It had last month commenced copper cathode production from the project and is transitioning to produce 50,000 tonnes per annum of copper cathode.
Tiger has a 60% interest in the Kipoi Project.
The company had placed the shares priced at $0.34 each to professional, sophisticated and other exempt investors.
Shares in Tiger had closed at $0.37 on 11 June before the company had gone into a trading halt on 12 June.
The placement falls within the Company's issuing capacity under ASX Listing Rule 7.1. and therefore does not require shareholder approval.
In addition to the placement, it has sourced an additional US$25million offtake prepayment facility.
The company has signed a non-binding term sheet in relation to this facility, which it expects to be finalised over the coming weeks.
Proceeds from the placement will be used for the following purposes:
- US$21 million to implement discretionary early works capital expenditure for Phase II and Phase III of the planned expansion program;
- US$10 million as a loan to Société de Exploitation de Kipoi, 60% subsidiary of Tiger and the operator of Kipoi, to settle the DRC Government's 5% interest in the Kipoi Project pursuant to the DRC Mining Code; and
- For additional working capital flexibility.
The capital expenditure items include an upgrade to the power distribution network and site works for the installation of 30MVA electrical transformers, the early development of heap leach pads 2, 3 and 4, and the installation of a conveyor and stacker system which will replace the current 800 metres truck haulage requirement of ore to the heap leach operation.
These initiatives are expected to materially reduce unit operating costs in Phase I as well as facilitate the implementation of the Phase II and Phase III expansion.
The working capital allocation is to provide adequate reserves against any unforeseen delays or costs during the SXEW ramp-up.
Kipoi Copper Project
Cathode production commenced on the 25 May 2014 after the tiger completed construction and commissioning of its Stage 2 solvent extraction electro-winning (SXEW) plant at Kipoi ahead of schedule.
Tiger expects the SXEW plant to reach full production capacity within three months and to produce 25,000 tonnes of copper cathode in its first full 12 months of operation.
The Feasibility Study for Stage 2 has confirmed the operation as a low-cost, high-margin project capable of producing 538,000 tonnes of copper cathode over 11 years.
This is from processing ore reserves from the Kipoi Central, Kileba and Kipoi North deposits and reject floats, slimes and medium grade ore stockpiles from the Stage 1 HMS operation.
It also continues to produce copper concentrate from its Stage 1 heavy media separation (HMS) plant.
The plant is expected to produce 39,000 tonnes of copper in concentrate before ceasing operation early in 2015.
Tiger Resources has made considerable progress with the Stage 2 solvent extraction electro-winning expansion at its Kipoi Copper Project having started copper cathode production earlier than originally expected.
The fund raising will allow the company to materially reduce unit operating costs in Phase I as well as facilitate the implementation of the Phase II and Phase III expansion.
We continue to maintain our estimate of future valuation which equates to a share price target of between A$0.58 to A$0.76 per share.
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