-- ADDS BROKER COMMENT --
Tanzanite miner Richland Resources’ (LON:RLD) £2.76mln fund raise was an achievement in current conditions for junior miners, according to broker RFC Ambrian.
The money means Richland looks able to fund the redevelopment of its mine in Tanzania and recapitalise its balance sheet.
“Despite the significant dilution to existing shareholders, this capital raising was essential to the continued solvency of the business and should provide the foundation for the refurbishment of the Merelani mine.”
Richland has been heavily loss-making recently in part due to illegal miners occupying its licence.
With the help of the Tanzanian government and state-owned STAMICO, its new partner, Richland has started to wrestle back its operations from the illegal miners. The money will restart operations.
RFC Ambrian said; “The sum of the placement is quite an achievement given the market cap of the company at this time.
“The register now shows strong investment support from the company’s management and customers.
“Significant uncertainty in terms of Richland’s near-term funding options has been removed and the future is starting to look a little more promising.“
Four of the miner’s directors doubled or more than doubled their stake through the open and placing at 3.4p, while five investors are now significant shareholders with holdings of 4.4% or higher.
Bernard Olivier, Richland’s chief executive, said: "We are very pleased with the success of the placing and open offer which have allowed all our shareholders the opportunity to participate.”
The broker added it would now like further news on progress to secure the southern areas of the mine and a clearer picture on the company’s funding requirements at the mine followed by a sustained period of operations with the illegal miner issue resolved.
Shares were 3.4p today.