Group 6 Metals (G6M) has shored up its bottom line as it closes in on first production at its Dolphin tungsten mine in King Island, Tasmania.
The company has received binding agreements in excess of $20 million as part of a placement priced at $0.17 per share, representing a 10.5 per cent discount to its closing share price on Wednesday November 23.
Group 6’s top four shareholders accounted for $8 million of the raise, which will be used to Dolphin capital expenditure, pre-production costs and general working capital.
Group 6 managing director and chief executive officer Keith McKnight said the placement was a sign of Dolphin’s potential.
“The commitments from investors are a strong endorsement of the progress G6M has made to date at the Dolphin tungsten mine, which will enter the final stages of construction in the coming months,” he said.
“As we near the commencement of production at Dolphin, this equity-raising provides funding certainty for the company at a critical time in our development.
“Despite several industry-wide challenges faced by construction projects, such as escalations in capital and operating costs, our team has worked tirelessly to ensure the project remains on schedule to reach this milestone in Q1 2023.”
In late October, Group 6 announced a 24 per cent increase in Dolphin’s net present value (NPV) from $241 million to $300 million.
This came despite the life-of-mine capital expenditure for the mine increasing from $129.2 million to $153.9 million amid soaring inflation and design enhancements to improve the construction, operation and reliability of the mine and processing plant.
Dolphin’s value boost reflects increasing tungsten concentrate prices and favourable foreign exchange conditions.
Following the completion of the $20 million placement, Group 6 will offer existing shareholders the opportunity to participate in a $3 million non-underwritten share purchase plan.