Austral Resources has locked in a debt restructuring deal with Glencore, Thiess and Secover that will allow the company to focus on developing the Lady Annie, Lady Colleen, and Mount Clarke-Flying Horse copper deposits.
Under the framework agreement, Austral will repay $78 million in secured debt to Thiess. The money will be repaid from the proceeds of the Anthill copper project located in Mount Isa, Queensland.
Austral will appoint a manager for the Anthill operation, and Glencore and Secover will receive the project’s proceeds to repay the debt.
Once the secured debt has been fully repaid, Austral will have a 10 per cent share in the Anthill production proceeds.
“This is the best position Austral has been in in relation to a debt solution,” Austral managing director and chief executive officer Dan Jauncey said.
“With secured debt exposure reduced to nil, shareholder dilution non-existent for this piece, and the capital structure simplified, the company is now positioned to attract renewed interest from quality investors and trade on a normalised basis as part of this restructure.”
Under the framework agreement, Austral will also launch an equity raise on August 1 in a bid to raise between $27 million and $35 million to repay Thiess, fund working capital and accelerate its suite of expansion projects. Thiess will receive $11 million from the equity raise.
Austral will also issue Thiess with a convertible note that has a face value of about $31.25 million.
“We will continue our focus on taking advantage of the favourable copper price environment and pursuing our growth strategy to create shareholder value through fast tracking our scoping study into a definitive feasibility study over the coming nine months,” Jauncey said.
“By ring-fencing the Anthill project, we can now focus on expansion projects that will extend the company’s extended mine life. This financial reset not only removes the weight of $78 million of secured debt but also sets the stage for a capital raise aimed at accelerating a list of expansion projects in the pipeline.”
The framework agreement is expected to be completed on September 2.
Once the agreement’s transactions have been completed, Austral’s mining services agreement with Thiess will be terminated.
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