TSX-listed Mandalay Resources has announced plans to raise C$60-million to address its short-term liquidity requirements.
The financing will be raised through a marketed public offering of up to about C$50-million of subscription receipts and an $8-million convertible bridge loan from a CE Mining affiliate.
In addition to making the bridge loan, CE Mining has also agreed to invest up to $12-million in the public offering on the same terms as all other investors, subject to the terms of the public offering.
Three of Mandalay’s largest shareholders have indicated their support for the public offering and have committed to making significant investments.
The capital raise announcement follows after the Canadian gold producer, during the fourth quarter of 2018 and the start of 2019, experienced a combination of “unexpected operational and financial events”, which negatively impacted on its cash flow and cash reserves.
Mandalay said on Monday that, without additional funding, it was at risk of breaching its obligations under its third-party credit arrangements.
President and CEO Dominic Duffy commented that the financing gave Mandalay the financial flexibility it needed to not only address short-term liquidity requirements, but also to maintain and grow the business.
In particular, he highlighted that the financing provides the capital required to ensure that the company executed the high-grade Youle vein development programme at Costerfield, in Australia, which the company sees as key to realising its objective of doubling its production profile over the next three years.