SILICA and coal miner Petmin would raise R60m and boost its share capital by a third through issuing shares to three institutions, the Group said yesterday.
It said that it would issue 66,6-million new shares, at 90c each to the New Africa Mining Fund, PSG Capital and an unnamed institution.
The fund will subscribe for at least R40m, or 44,4-million shares.
PSG Capital and the other institution will each subscribe for at least R10m worth of shares, subject to a minimum of R60m being raised and to shareholder and regulatory approval.
Petmin’s shares traded at 110c yesterday, having gained 32% in the past two weeks. According to Petmin’s latest annual report, the fund is Petmin’s second-biggest shareholder, after management, with 17,09% of the shares. PSG Capital holds 9,95% of the Group.
The Group did not specify in its stock exchange notice what the funds would be used for, but in December Petmin’s shareholders approved plans to develop its Somkhele anthracite project at an estimated cost of R114m.
Management said at the time that the development would be financed through a combination of shares issued to the fund, bank debt and internal resources.
Described by Petmin as "a critical development asset", the Somkhele anthracite project lies about 18km west of Mtubatuba in KwaZulu-Natal.
It is one of the largest opencast anthracite resources in SA, with an expected life of 15 years. An initial run-of-mine production of 480000 tons a year is expected, ramping up to full production of 950000 tons a year by 2010. Petmin estimated the potential local inland market for anthracite was about 1,5-million tons a year, excluding 1-million tons for the low-smoke and smokeless fuels market.
According to the fund’s report, anthracite resources are dwindling rapidly in SA, and this enhances the importance of Somkhele.
The fund had approved an investment of R50m to develop the project.
Other Petmins assets are the SamQuarz silica mine, Springlake Colliery and Baobab joint venture, which consists of a number of prospects.
It was negotiating with firms including an internationally listed Group that could affect the price of its securities.
© 2009 Petmin Limited