Western Areas plans to raise A$70m to bolster its balance sheet

PERTH (miningweekly.com) – Nickel miner Western Areas on Thursday announced plans to raise up to A$70-million through a share placement and share purchase plan (SPP), to strengthen its balance sheet.

The miner would raise A$60-million through a share placement to eligible sophisticated, professional and institutional investors, with shares priced at A$1.95 each.

The placement would be conducted through a bookbuild, with Western Areas pointing out that the issue price represented a 9.7% discount to the company’s closing price on March 30. The share placement would be conducted under the company’s existing capacity, and would not require shareholder approval.

In addition to the share placement, Western Areas was aiming to raise a further A$10-million through an SPP, with eligible shareholders allowed to invest up to a maximum of A$15 000 each. The shares under the SPP would also be priced at A$1.95 each.

MD Dan Lougher said on Thursday that the equity raising was designed to provide greater balance sheet flexibility during a period of decade-low nickel prices, and to enhance Western Areas’ ability to take advantage of prudent growth opportunities as they presented themselves.

“While our operations at Forrestania remain cash flow positive, even at current nickel prices, we consider the equity raising to be a sensible measure to strengthen the company’s balance sheet and maintain flexibility to take advantage of an improvement in fundamentals.”

Lougher added that the equity raising also provided Western Areas with the ability to accelerate the remaining repayments for its Cosmos nickel complex, at a reduced price.

Western Areas acquired the Cosmos nickel complex from Glencore for A$26-million.

“We have previously announced the deferral of certain discretionary capital projects and activities to preserve cash, while maintaining our investment activities at Cosmos and the Western Gawler. With the increased balance sheet strength as a result of the equity raising, we will maintain our ability to rapidly commence these discretionary activities should market conditions be supportive, while also continuing to advance the company’s medium-term growth opportunities,” Lougher said.