Coal miner Golden Energy and Resources, a week after reporting record earnings for FY2021, announced plans to raise $86.9 million via a placement to fund acquisitions and working capital.
KGI Securities has been appointed to place out 285 million new shares at 30.5 cents each - a discount of 4.7% to the last traded volume weighted average share price of 31.99 cents on Feb 25.
The placement is not underwritten. If the shares are fully placed out, GEAR’s total share base will increase to nearly 2.64 billion shares from 2.35 billion now.
Its net tangible asset, on a pro forma basis, will increase from 10.34 US cents as of Dec 31 2021 to 11.64 US cents.
GEAR say funds from the placement will help strengthen its financial and liquidity position, improve its cash flows as expands its business and, or, meet working capital needs.
“The company hopes to strengthen its balance sheet, capital structure and enhance the group’s financial flexibility through the Proposed Placement,” GEAR adds.
Last November, GEAR, via its Australia-based subsidiary Stanmore Resources, has announced a deal to buy BHP’s 80% stake in BHP Mitsui Coal (BMC).
BMC focuses more on producing coal used for refining steel. In contrast, GEAR’s coal dug from its existing are more used for generating power.
Besides coal, GEAR has taken stakes in gold mines too, albeit on a smaller scale.
GEAR had said that this “transformative” acquisition, which costs some US$1.1 billion, will help itself diversify its markets.
On Feb 18, the company announced record earnings of US$171 million for 2HFY2021 ended Dec 2021, up 113.2% y-o-y.
Revenue in the same period was US$1.07 billion, up 32.3% y-o-y, thanks to higher coal prices amid a pandemic-induced supply shortage.
For the whole of FY2021, earnings surged 629% y-o-y to US$251.3 million – its all-time high. Revenue was up 61% to US$1.87 billion, also a record.
Despite the record earnings, GEAR chose not to pay a dividend, citing the need to husband resources.