Marenica Energy (ASX: MEY) will undertake a fully underwritten one for two non-renounceable entitlement issue to raise around A$3.2 million to fund further metallurgical testwork at its Marenica uranium deposit.
The company will issue up to 249.3 million shares at $0.013 per share on the basis of one new share for every two existing shares held.
Importantly, the entitlement issue will be fully underwritten by existing substantial shareholder Hanlong Energy.
The funds will be used to fund Marenica's activities, including the assessment of whether screening, de-sliming, gravity separation, magnetic separation and/or flotation can be applied to upgrade the yield from the Marenica uranium deposit.
Detailed mineralogical testwork conducted as part of a technical review of the project show that the Marenica deposit could be open to processing using techniques not typically used in the recovery of uranium.
Mineralisation at Marenica has been found to have a number of distinctive characteristics, which could be conducive to conventional metallurgical processes used extensively in other industries.
If these techniques can be applied successfully to ore from Marenica, the uranium concentration will be significantly improved, reducing the amount of material to be treated and lowering the capital and operating costs.
The Marenica deposit is located in a world-class uranium province in Namibia, host to Rio Tinto's (ASX: RIO) Rossing Uranium Mine and Paladin Energy's (ASX: PDN, TSX: PDN) Langer Heinrich Mine.
It is located about 90 kilometres northeast of Swakopmund in Namibia, and hosts a JORC Resource of 276 million tonnes at 94 parts per million for 57 million pounds of contained uranium.
In other news, Marenica has agreed to redeem the existing $2 million convertible note held by Hanlong and issue a new convertible note.
The new convertible note will have the same face value, interest rate and maturity date, and a conversion price of about $0.026 per share.