Mwana Africa raises US$3.2mln to provide working capital

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By Zimbabwe Investor on September 5, 2013. No Comments

Mwana Africa CEO Kalaa MpingaMwana Africa has brought in around US$3.2mln (£2.1mln) via a share subscription to provide working capital.

Investors welcomed Thursday’s stock exchange announcement, and the shares rose over 8%.

The funds, given the firm’s progress on cost cutting, should be enough to meet its working capital requirements for the “foreseeable future”, the miner said.

The group’s largest shareholder China International Mining Group Corporation (CIMGC) took part, subscribing for around 42mln shares of the approximate total of 130.25mln and will now hold 23.07% of the firm.

Ning Yat Hoi, the chairman of CIMGC and a director of Mwana, also particpated and will hold 6.85%.

The subscription price of 1.57p a share represents a 10% premium to the 20 day volume weighted average price as at close of business on September 2 and a 6% discount to the closing mid-market price of 1.67p as at close of business on Sep 4 (yesterday)

Mark Wellesley-Wood, Mwana’s non-exec chairman, said: “I am delighted with the support shown by CIMGC and Mr Ning for the company.  Our focus now is on driving down costs and extracting maximum value for shareholders from our asset portfolio.”

The pan-African mining company said its Freda Rebecca Gold Mine is currently cash flow generative, and Mwana will continue to seek efficiencies and explore tailings retreatment opportunities to further enhance value at the mine.

“Zani Kodo, Semhkat and Bindura Nickel Corporation (“BNC”) will remain within the Mwana portfolio; any further development of these projects will be done through project level funding, either in the form of joint ventures and/or debt finance, with the Semhkat copper project already benefitting from a joint venture with Hailiang (as previously announced).

“As previously announced, in light of the new resources statement at the BNC Trojan mine, the Trojan mine plan has been revised to target the higher grade zones of the ore body, known as “massives”, which significantly improves BNC’s cash flow and reduce its working capital requirements,” the firm told investors in Thursday’s statement.

Broker Liberum said: “The additional funding addresses short term financing concerns and the recently articulated cost cutting measures show a firm commitment from management in facing the company’s current difficulties.”

However, it said its rating on the firm remained “under review” until it received further clarity from a multi-asset review.