The company behind Woodlawn Mine is confident of generating revenue in the next few weeks, following a temporary suspension of trading.
Heron Resources announced last month that the multimillion project to extract lead, copper and zinc from the Tarago district mine was seven months behind schedule.
In a statement, the company said this had "severely impacted" working capital needs. Its board sacked managing director and CEO, Wayne Taylor, and chief operating manager, Andrew Lawrie, on the back of the delay.
But since then, Heron has embarked on a $91 million recapitalisation exercise. Trading on the Australian Securities Exchange recommenced on October 8.
"The capital raised is very positive and provides us with the cash needed to get the mine to a point of generating positive cashflow," company secretary and general manager of finance, Simon Smith, said.
"We're confident of generating revenue in the next few weeks."
The recapitalisation raised $11.5 million through the issue of 57,584,627 ordinary shares to institutions. The second stage, a retail component, remains open and aims to raise $24 million. Mr Smith said under the third phase, $52 million in convertible notes would be issued to major project backers, Orion Finance, Greenstone Finance of London and Minneapolis-based Castlelake. In 2017, these international companies put up $60m, $42m and $33m respectively towards the venture.
"They have agreed to top up their commitment because they have belief in the project and want to protect their investment," Mr Smith said.
But the major investors also wanted settlement of a dispute with Sedgman, which built the processing plant. That company last year claimed $53m above the $109m contracted price, a figure Heron strongly disputed.
But now Heron has agreed to pay a $15m settlement. Mr Smith said the three major financiers wanted this settled ahead of further capital raising to avoid future legal dispute.
"Fundamentally, Heron's position is that we agree with the maximum price contract with Sedgman," he said.
"But Sedgman said that over time it morphed into different things. We disagreed with that but we will put it behind us."
The recapitalisation and settlement will be put to an annual general meeting in December.
Meantime, Sedgman is doing minor commissioning of the processing plant. Mr Smith said production was underway and would ramp up across two processes - throughput and ore recovery - over the next six to seven months.
"Crawford Freight Lines is transporting ore concentrate to Port Kembla daily and we're really pleased that it's going so smoothly," he said.
"There is no doubt about the project's future. This capital raising ensures Woodlawn will be a success and that suppliers and workers can have certainty."
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