Aquarius Platinum Ltd plans to raise up to $251 million in a share placing, rights issue and convertible bond issue to pay off a bridge loan and fund operating expenses, it said on Thursday.
Due to the rights issue, it might also adjust the share exchange ratio for its planned all-share acquisition of Ridge Mining Plc (RDG.L: Quote).
Aquarius (AQP.L: Quote)(AQP.AX: Quote)(AQPJ.J: Quote) said on Feb. 18 it planned to buy Ridge in an all-share offer consisting of one of its shares for every 2.75 Ridge shares. The offer values Ridge at about 63 million pounds ($92 million) based on Wednesday's closing share prices. [ID:nLI249359]
The acquisition of Ridge would give Aquarius access to Ridge's flagship Blue Ridge Mine which is expected to move to full production in the third quarter, as well as the nearby Sheba's Ridge Project and will boost Aquarius' resource base.
Liberum Capital has said the deal will allow Aquarius, which has most of its operations in South Africa, to cement its position in a concentrated industry and bring it in line with other major producing companies.
Analysts have long called for a reduction in the large number of small platinum players in South Africa which grew rapidly during a commodities boom but are under pressure from weaker prices.
Platinum prices fell from a high of $2,290 an ounce in 2008 to end the year at $924.50 following the slump in automobile demand. Prices are currently trading at $1,141/1,151 an ounce.
Aquarius, the world's fourth biggest platinum producer, said it hopes to raise a minimum of $80 million through a placing of up to 46.3 million shares, equal to about 14.2 percent of the existing share capital.
If this target is achieved the company intends to announce the terms of a rights issue that combined with the share placing will raise about $183 million.
The company also plans to raise up to 650 million rand ($69 million) via a convertible bond issue.
Of the total proceeds, it plans to use $165 million to pay off a bridge loan. The company has been seeking to refinance a debt facility that is due in June.
It expects to make an offer for Ridge following the successful closing of the share raising on Thursday. Ridge has recommended the offer.
At 1023 GMT, Ridge shares were up 24 percent at 65 pence, while Aquarius was up 16 percent at 214 pence.
Ridge's 50 percent-owned Blue Ridge mine is expected to launch production next month and produce around 75,000 ounces of platinum group metals (PGMs) this year, ramping up to steady state production of 125,000 PGM ounces by 2011.
The acquisition of Ridge would boost Aquarius' attributable proven and probable reserves by 61 percent.
On Wednesday, AIM-listed Ridge posted a 53 percent jump in annual pretax profit to $27.1 mln. [ID:nRn1Z4876P] (Editing by David Holmes) ($1=9.428 Rand)
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