Forsys lifts private placement to $660 000, on track for 76% cost reduction by 2017
VANCOUVER (miningweekly.com) – Uranium project developer Forsys Metals has increased the amount of a private placement announced on Monday by a further $120 000 to $660 000, after it received additional interest from existing and new subscribers.
The placement price has also been revised upwards by a cent to $0.06 a unit. Each unit will consist of one Class A common share and one half of one common share purchase warrant that entitles the holder to acquire a new common share at a strike price of $0.07 for a period of two years from the date of issue.
The company’s largest shareholder, Leonardo Global Trading, has also made a firm commitment to subscribe for 8.83-million units for $530 000.
Proceeds from the private placement will be used to fund the Norasa uranium project, in Namibia, as well as for general working capital purposes, the company advised on Wednesday.
Forsys holds 100% ownership of the Norasa project, which comprises the fully permitted Valencia and Namibplaas uranium projects. The $433-million Norasa project’s reserves have been estimated at about 90.7-million pounds of uranium oxide (U3O8), with expected operating costs of $32.96/lb of U3O8 over the first five years and $34.72/lb of U3O8 over the 15-year mine life.
LOW PRICES
However, in response to the protracted low uranium prices, Forsys has been forced to cut costs, with all directors, senior management and staff having accepted substantial reductions in the cash component of their salaries. The average cash outgoings for wages and salaries will be reduced by 87% from the fourth quarter.
The reductions in cash outgoings will be accrued and settled in shares pending customary approvals and conditions. These efforts will achieve a low burn rate, with less than $50 000 in outgoings per month from next quarter, CEO Marcel Hilmer advised earlier this week.
Companywide cash flows are estimated to decline by 52% this year, and by 76% to $600 000 when compared with 2014 cash spend totalling $2.4-million.
Meanwhile, spot uranium prices plummeted from an all-time high of $136/lb in 2007, to a mere $26/lb, as at August 8.
Forsys also holds a 70% interest in the Ondundu gold project in the country, for which B2Gold had in January struck an earn-in accord to earn a 100% interest.
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