Perth-based Hazelwood Resources will look to raise up to $7 million to accelerate production at the ATC ferrotungsten joint venture facility in Vietnam, in which it has a 60 per cent stake.
A share placement of up to about $5 million received strong support from investors at 3.8 cents per share, and an additional $2 million will be raised in a share purchase plan being offered to eligible shareholders at the same price.
Hazelwood’s corporate adviser, Hartleys, will broker the capital raising opportunity.
The funds raised will be primarily go towards the acquisition of tungsten feedstock used during the ramp-up of its third production campaign at the ATC ferrotungsten project, and for working capital for the company.
Hazelwood also expects to have sufficient capital to repay its $3.5 million bridging finance facility, due on December 12, with the company to apply part proceeds of the placement for repayment if necessary.
Sales from the current production campaign are in progress and Hazelwood has approximately $4 million of finished saleable product on hand from the project.
“Product quality and production efficiency is continuing upwards. The on-going ramp-up of production into this third campaign and beyond is set to deliver strong operating cash-flows,” Hazelwood managing director Terry Butler-Blaxell said.
“Completion of the placement will place Hazelwood in a stronger financial position to meet its ramp-up schedule.”
The company will look to future vertical integration of its tungsten deposits in Western Australia's Pilbara region to provide feedstock for its downstream processing business in Vietnam.
The ATC ferrotungsten facility is the largest of its type outside China, with Hazelwood acquiring the majority stake in 2010.
Hazelwood shares are trading at 3.9 cents per share, down 13 per cent since a voluntary trading halt on November 25.
