PERTH (miningweekly.com) – Bauxite developer Metro Mining is hoping to raise some A$52-million in capital to maintain the development momentum of its Bauxite Hills mine, in Queensland.

Metro on Friday announced that the equity raising will comprise a share placement of 126.9-million shares to institutional and sophisticated investors, priced at 12.5c each, to raise an initial A$15.9-million, and a one-for-two pro rata nonrenounceable entitlement offer of some 292.3-million shares, to raise a further A$36.5-million.

The offer price represented a 19.4% discount to Metro’s last trading price and a 20.8% discount to the 30-day volume weighted average price of the company’s shares.

The institutional placement will be made under Metro’s existing capacity and will not require shareholder approval.

“The equity raising represents another major milestone for Metro. This equity raising allows Metro to take advantage of the transformational Gulf acquisition benefits by maintaining development momentum at Bauxite Hills mine and to strengthen the balance sheet ahead of project construction,” said Metro MD Simon Finnis.

“We are also delighted to have the ability to introduce new institutional investors to the register while, at the same time, providing existing shareholders the opportunity to invest further in Metro at this exciting time.”

Funds will be used to buy long-lead items and grade control items required for Bauxite Hills, as well as environmental bonding required for the start of early works. The funds would also allow for the completion of a bankable feasibility study and final project approvals and will contribute to the full repayment of bridging loan facilities related to the Gulf Alumina acquisition.

Metro in January delivered a prefeasibility study into a four-million-tonne-a-year operation at Bauxite Hills, which indicated that the project would have a 13-year mine life, a net present value of A$582-million and an internal rate of return of 156%.

With the addition of Gulf’s Skardon River project, Metro has essentially doubled the mineral reserve at its Bauxite Hills mine, with the direct shipping ore (DSO) reserve now estimated at 96.5-million tonnes.

DSO resources were estimated at 128.8-million tonnes for the enlarged project, up from the previously defined 65.3-million.