Aim-listed US-focused Phoenix Copper intends to raise about £2.2-million (before expenses) through the issue of new ordinary shares to fund the purchase of mining and processing equipment at a potential substantial discount to new value, and for general working capital purposes, while the company continues to work towards completion of its proposed corporate bond issue.

The allotment and issue of the new ordinary shares pursuant to the fundraise will be within the company’s existing share authorities granted at its annual general meeting in June 2023.

Certain directors of Phoenix and members of the advisory board have indicated their intention to participate in the fundraise, by way of a direct subscription with the company.

In the event that the purchase of the mining equipment does not progress, all the net proceeds will be used for general working capital purposes and to progress the work at the company’s Empire openpit mine in Idaho, in the US.

As announced on January 18, the prefeasibility study (PFS) for Empire is nearing completion and, barring any unforeseen delays, is anticipated for delivery to the company by late first quarter or early second quarter.

The final PFS report will include a comprehensive mine plan, mineral processing design, compliant mineral reserves calculated as deliverable metal for smelting or refining, net of mining dilution, detailed operating and capital cost estimates, and final economic analysis and cashflow.

The completion of this report will represent a significant milestone for the company and will enable the directors to make final amendments to the plan of operations for permitting purposes and, subject to finance, to procure the remaining capital equipment items, Phoenix points out.

The milling and recovery process developed for Empire is crush-grind and acid tank leach-cementation copper.

As part of the estimation and pricing of capital equipment for the PFS, Phoenix has been given an opportunity to purchase certain equipment in good operating condition at a significant discount to the price of that equipment when new, the company highlights.

This purchase should give the company a significant capital expenditure (capex) reduction and the directors anticipate it will have a material impact on the PFS economic analysis, as well as reducing the time required to purchase certain long lead time items, it adds.

Phoenix is anticipating purchasing, among other items, a grinding circuit and related components, including spare parts.

The purchase of any equipment is subject to negotiations and completion of final purchase documentation.

In addition to the fundraise, Phoenix remains in advanced discussions on its proposed corporate copper bond financing and remains in negotiations with the lender to roll the company’s existing short-term loan facility into a new and larger facility before the repayment date of March 23.

During such discussions the lender has agreed to waive its conversion rights on the short-term loan facility for one month from January 25.

In the event that the bond financing does not complete and a new facility is not put in place before March 23, Phoenix will be required to seek alternative sources of funding to fund the future working capital and capex requirements of the company, and to repay the facility.

The fundraise, which is being undertaken while Phoenix continues to work towards completion of the company’s proposed corporate bond issue, will comprise a placing raising about £1.2-million; a subscription of about £1-million by certain directors, advisory board members of the company and certain other investors; and a retail offer of up to £0.2-million to eligible existing retail shareholders on the BookBuild Platform.

The retail offer aims to provide existing retail investors in the UK with an opportunity to participate in the fundraise.

Panmure Gordon and WH Ireland are acting as joint bookrunners in connection with the placing.

Tavira Financial is acting as lead bookrunner for the subscription.