Contango Holdings said it has received a proposal from strategic investors to subscribe for about £5 million worth of shares, priced at 1.11p a share, which would equate to a 39% premium to Thursday's mid-market close.
The proposed subscription would see Muchesu mine operator Pacific Goal Investments (PGI) and existing major shareholder Huo Investments take 450.45 million new shares in aggregate. PGI would subscribe for 358.68 million shares and Huo for 91.769 million, taking their respective stakes to 29.7% and 20.4% of the enlarged share capital.
Contango said the proceeds would be used to repay all outstanding debt, including previously reported shareholder loans, leaving the company debt free. Chief executive Danny dos Santos said the recapitalisation would also position the group “to pay dividends to shareholders as royalty income grows at Muchesu”.