ASX-listed Discovery Metals, which owns the Boseto copper mine, in Botswana, has signed a $108-million recapitalisation deal with Singapore-listed investment holding company Blumont Group.

The deal will comprise a A$8.75-million share placement and a $100-million convertible bond placement.

Under the share placement, Blumont will subscribe for more than 73-million new shares in Discovery Metals, at 12c each, representing 15% of the company’s issued share capital.

Blumont has also conditionally agreed to subscribe for 100 000 five-year convertible bonds with a face value of $1 000 each, con-vertible into fully paid ordinary shares at 15c a share. The convertible bonds will raise some $100-million.

On conversion of the bonds, Blumont will hold a 60% interest in Discovery Metals.

“The structure of the arrangement aligns the interest of Blumont and shareholders, and is expected to allow the company to reduce debt and deploy additional funds to equity- enhancing projects,” says Discovery Metals MD Brad Sampson.

The proceeds from the transaction will be used to repay the revolving credit facility, as well as the principal of the project finance facility. A portion of the funds will also be used to repay corporate advisory fees while the balance will be used to fund development, exploration and working capital.

Meanwhile, Discovery Metals has also agreed to appoint Blumont’s Russell Luxford to the board once the share placement has been completed, as well as a second director to be nominated by Blumont, at the closing of the convertible bonds.

Sampson notes that the partnership with Blumont and the additional technical skills that will be added to the board will deliver significant benefits for the company.
“The restructured project finance facility, particularly the two-year moratorium on principal and interest payments, is planned to enable the company to deploy its available cash to initiatives directed at lifting shareholder value, including project enhancement initiatives and exploration activities,” Sampson says.

The Blumont transaction is subject to a number of conditions, including waivers from current senior debt holders and the restructuring of the finance facility terms, as well as Blumont approving the proposed oper-ational, technical and exploration programmes and budgets at Discovery Metals.

Meanwhile, Discovery Metals announced last week that it would launch a share purchase plan, allowing shareholders to subscribe for up to A$15 000 in fully paid shares at a placement price of 12c a share.
The share purchase plan could raise a further A$10-million.