JOHANNESBURG (miningweekly.com) – Toronto-based Rio Verde’s stock rose by one-third on Friday, after the Brazil-focused fertiliser hopeful said it was selling shares at an 87% premium to the previous day’s closing price to raise C$15-million.
In a market where many junior exploration companies have been forced to cancel their equity raisings, even at attractive discounts, selling shares for such a big premium bodes well for Rio Verde, CEO Stephen Keith said.
The company has already received commitments for C$11-million of the financing at C$0.42 a share.
The money will go towards exploration and a prefeasibility study at the Sergipe potash project, located in eastern Brazil.
Rio Verde, which split from Talon Metals in 2010, aims to complete a prefeasibility study at the project in 2013. First, though, the company plans to complete an initial resource estimate and scoping study by the end of this year.
At the Fosfatar phosphate project in Pará state, an October resource estimate predicted there to be 1.93-million tons of the crop nutrient in the ground. The preliminary economic assessment released at the same time gave Fosfatar a C$62.9-million net present value, with an estimated one-year payback period.
The project will cost C$10-million to build and produce 206 000 t/y of phosphate, the study forecast.
Keith said the equity financing would allow Rio Verde to “comfortably execute an expanded exploration and development programme” at its projects.
The company expected to close the funding deal by June 15.
Shares in Rio Verde popped 33.3% higher, to end Friday at C$0.30, giving the firm a C$27.3-million market value.