PERTH (miningweekly.com) – Junior Alcyone Resources would undertake a rights issue to raise some A$14-million to recapitalise its balance sheet.

The miner said on Monday that it was proposing to raise the funds through a three-for-two nonrenounceable pro-rata entitlement offer, at an issue price of 6c a share, along with a one-for-two free attaching option, exercisable at 1c a share.

The raising would enable Alcyone to recapitalise and simplify its funding framework, the miner said, adding that the funds raised would be used to pay down outstanding debt and fund operational improvements, including key plant and equipment upgrade at Alcyone’s flagship Texas silver operation, in Queensland.

The funds would also provide sufficient working capital to allow Alcyone to work towards a yearly silver production of some one-million ounces.

Company chairperson Paul Sylvia said on Monday that the turnaround of the Texas operations was about getting a solid and simplified financial structure in place to allow the operational improvements to be implemented.

“This is a project in production that has the potential to deliver very solid earnings and cash flow if we get this process right. Despite two one-in-100-year floods, plant constraints and unfortunate board and management issues last year, Alcyone still managed to produced 439 000 oz of silver in the six months to December.”

Sylvia noted that the company managed to achieve significant cost reductions to corporate overheads over recent months, even before implementing operational improvements.

“We know what needs to be done to turn this company around and we’re taking the steps required. We think it is appropriate to give existing shareholders the opportunity to support Alcyone at the discounted price in this rights issue, and participate in the upside from our flagship silver project.”

Meanwhile, Alcyone said on Monday that it had completed the bridge funding through the issue of A$1.8-million in convertible promissory notes, which would be repaid following the completion of the entitlement issue.

Alcyone has further established a A$10-million standby line of funding with Celtic Capital, which has committed to invest the funds over a three-year period, subject to Alcyone having sufficient placement capacity and the shares coming out of suspension.