Aim-listed Cradle Arc plans to redeem all of its £1.28-million outstanding convertible loan notes for £1.59-million in cash, by way of staged and back-end weighted payments up to their scheduled maturity date of December 31.
Funding for such redemption, alongside additional working capital for the company’s Mowana copper mine, in Botswana, has been raised through subscriptions for new ordinary shares of £0.0001 each in the capital of the company at a price of 5p a share and the accelerated exercise of certain outstanding warrants to raise an aggregate amount of £2.4-million before expenses.
“The agreement reached with the holders of the convertible loan notes prevents the prospect of future dilution from this instrument through the potential issue of new ordinary shares at a significant discount to the company’s prevailing share price at that time, which has understandably been a concern for both our existing shareholders and prospective investors,” CEO Kevin van Wouw said in a statement on Wednesday.
He added that the new funds raised have primarily been derived from the early exercise of certain warrants held by existing shareholders and debt providers to the company.
“The planned purchase of additional equity in Leboam, Mowana’s holding company, will serve to increase our attributable interest in the Mowana mine and, thereby, help to mitigate the dilution being experienced by existing shareholders from these transactions,” he noted.
In conjunction with the raising of additional equity funding, the company has been able to agree the deferral of principal repayments on its secured debt and certain other payments to creditors, which serves to provide additional working capital headroom through to January 2019 during the critical production ramp-up period at Mowana.
“Collectively, the increase in working capital headroom and planned additional equity investment in Leboam, reduces the group’s risk profile at a time of volatile copper prices, and better positions us to seek and secure the financing required to move forward with our dense medium separation expansion project in due course,” he said.