Audrey Resources (TSE) is taking steps to obtain the $40 million it needs to repay debt and finance development of the Mobrun polymetallic mine near Rouyn-Noranda, Que., over the next three years.
Recently, the company filed a preliminary prospectus for an equity issue eligible for inclusion in the Quebec Stock Savings Plan (qualifying for a 100% tax deduction).
President Guy Hebert is also testing the market’s appetite for the equity portion of the financing which is to be underwritten by Levesque Beaubien Geoffrion of Montreal.
A company spokesman said Audrey’s attempt to obtain financing has not been helped by the falling value of its shares. Because of declining zinc prices and Audrey’s failure to obtain a buyer for its 70% interest in the Mobrun mine, the shares have plummeted from a 52-week high of $4.10 to a low of $1.30.
As a result, Caroline Huynh, Audrey’s vice-president of investor relations, couldn’t predict what the debt to equity ratio of the financing will be. Last month, Audrey announced that its US$12.1-million debt, due Sept. 30, had been extended to June 30. In addition, partner Minnova (TSE) has agreed to spend the remaining portion of the $10 million needed to earn a 50% stake in the 1100 lens below the 4850 level.
Under an agreement with Minnova, Audrey is spending $30 million to reach the upper portion of the 1100 lens by extending the existing Mobrun shaft by about 200 metres.
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