Southern Hemisphere Mining Limited (TSX VENTURE:SH)(ASX:SUH) has announced that it has arranged a A$20 million share placement to underpin a significant new phase of exploration across its portfolio of copper and copper-gold projects in South America as well as initial testing of a newly acquired iron sands project.
Part of the funds raised will also be applied towards pre-development expenditures for its Los Pumas Manganese Project in Chile, where it has recently completed a Pre-Feasibility Study and is aiming to deliver a Feasibility Enhancement Study during the first Quarter of next year.
The strongly supported capital raising provides an opportunity for Southern Hemisphere to add value to its extensive copper-gold portfolio in South America and diversify its commodity exposure, while at the same time maintaining the development momentum of its near-term production asset in the manganese business.
Share Placement Details
The share placement, comprising approximately 47.6 million new fully paid ordinary shares at a price of A$0.42 (C$0.42) per share to raise A$20 million before costs ("Placement"), is being made to institutional and sophisticated investors in two tranches.
Southern Hemisphere expects to issue approximately 15.4 million ordinary shares on settlement of the unconditional portion of the Placement on or about Wednesday, 3 November 2010 ("Closing Date").
Southern Hemisphere has also received commitments for the conditional portion of the Placement for the purchase of a further 32.2 million ordinary shares to be apportioned between shares and subscription receipts. These ordinary shares will be issued and the subscription receipts will convert into shares subject to shareholder approval and other closing conditions being satisfied. Closing of the conditional portion of the Placement is expected to occur on or about 29 November, 2010.
The proceeds from the issue of the subscription receipts will be paid to Southern Hemisphere on or about 11 November, 2010 and placed in escrow pending shareholder approval and satisfaction of certain other release conditions, including the issuance of a receipt by Canadian securities regulators for a final short form prospectus qualifying the conversion of the subscription receipts. Upon satisfaction of the release conditions, each subscription receipt will convert into one ordinary share of Southern Hemisphere.
The Placement was arranged by Euroz Securities Limited and managed jointly by Euroz and Dundee Securities Corp. The Placement attracted strong institutional and professional investor support from both existing shareholders and new investors.
Completion of the Placement is subject to certain regulatory approvals, including the approval of the TSX Venture Exchange.
Use of Funds
The funds raised will be used for the following purposes:
To undertake immediate drilling programs at a number of walk-up drill targets identified within the Company's three priority copper and copper/gold projects in Chile, as well as ongoing geological reviews and target generation;
To undertake initial auger drilling and bulk sample testwork at the recently acquired Chanco Iron Sands Project in Chile; and
To make payments relating to key long-lead items, complete Front End Engineering and Design (FEED) and undertake a metallurgical optimisation study for the Los Pumas Manganese Project in Chile.
The Company plans to immediately mobilize rigs to execute work programs at the Chitigua, Santa Gracias/Chacay and Mantos Grandes Projects, three priority projects located within Southern Hemisphere's extensive portfolio of 13 copper and copper-gold projects which cover a total area of 800km2.
This is a world-class copper belt which hosts several major discoveries.
The Chanco Iron Sands Project covers an area of 24km by 3km and offers an opportunity for Southern Hemisphere to enter the iron sands business and generate an additional source of cash flow alongside its manganese business. Testing of the suitability of the Company's iron sands product is underway with a specialty steel producer in China, and further work programs including auger drilling and bulk sample testing is planned.
Southern Hemisphere recently completed a positive Pre-Feasibility Study on the Los Pumas Manganese Project which demonstrated attractive economics. A Feasibility Enhancement Study is currently underway and targeted for release in the first Quarter of next year, with first production targeted for the first Quarter of 2012.
Southern Hemisphere Chairman and Managing Director, Trevor Tennant said: "I am delighted with the very strong level of investor support for this capital raising, both in Australia and Canada, which provides Southern Hemisphere with the ability to unlock the value of our substantial South American copper and copper-gold assets and commence work on a newly acquired iron sands opportunity while maintaining development momentum at our Los Pumas Project.
"This capital raising marks an important turning point in the Company's history, giving us the capability to build a truly diversified international mining business with exposure to three commodities which are in very high demand globally. I take this opportunity to welcome our new shareholders and look forward to sharing with them in our growth over the years ahead."
Source: Southern Hemisphere Mining Limited