Mineral resources mining company Ivanhoe Australia has announced a three-for-ten accelerated non-renounceable entitlement offer to raise up to A$80m ($83m).
Ivanhoe will offer its shares at a price of A$0.48 ($0.49) each and an 11.1% discount to all eligible shareholders.
Comprising institutional and retail components, the offer’s institutional component will raise approximately A$74m, with the company’s major shareholder Turquoise Hill extending its support with A$40m ($41.47m).
Funds from the offer are expected to be employed to repay Ivanhoe’s loan to Turquoise Hill, progress the Starra 276 mine infrastructure upgrade, and accelerate exploration and development.
Additionally, the company will use the cash proceeds to fund working capital and other purposes.
The remainder of the institutional entitlement offer is underwritten, wherein shares that were not purchased by Turquoise Hill will be offered to institutional shareholders and other eligible institutional investors.
Following the offer’s closure, Turquoise Hill will own a 57.7% in Ivanhoe, a drop from the earlier 58.7% stake before the offer.
Mining major Rio Tinto owns a 50.9% stake in Turquoise Hill.
Ivanhoe Australia CEO Ines Scotland noted that the offer strengthens the firm’s balance sheet and that, combined with the Osborne project operating cash flows, ensures sufficient funds for planned operations and exploration.
"This will also enable Ivanhoe Australia to seek to exploit brownfields exploration targets to increase mine life within a disciplined capital development cost framework and target high priority greenfields exploration prospects within the company’s portfolio of exploration tenements in the Mount Isa region," Scotland said.