Zircon Junior in Fundraising Frenzy

JUNIOR resource play Australian Zircon has launched a suite of financial arrangements designed to recapitalise the ailing zircon producer.
In an announcement to the stock exchange, Australian Zircon said it had finalised a $A40 million debt-for-equity arrangement with Austrian metals trader DCM DECOmetal.
The deal will see the Austrian company convert its convertible notes debt and its loan funds into approximately $40 million worth of Australian Zircon shares at 4c each.
The share placement arrangement will lift DCM’s stake in Adelaide-based Australian Zircon to around 69%.
In a further recapitalisation move, gold company Crescent Gold has agreed to extend the term of its $4 million working capital facility with Australian Zircon. Meanwhile, the miner will provide Crescent with an option to convert the loan into ordinary shares at 4c per share.
Lastly, in conjunction with the DCM arrangement and Crescent extension, Australian Zircon has launched a one-for-one rights issue to its shareholders.
Funds from the rights issue and the DCM agreement will go towards the ramp-up of the company’s Mindarie zircon mine in the Murray Basin, overdraft repayments and issue costs.
The miner’s three-pronged recapitalisation bid comes as the credit crunch takes a firm grip on many resource companies and even cashed-up companies – such as OZ Minerals – are reporting financial woes.
However, Australian Zircon is far from cashed-up.
At the end of the September quarter, Australian Zircon posted a negative operating cash flow of nearly $10 million, while the company had a negative cash balance to the tune of $843,000.
MiningNews.net was unable to reach Australian Zircon before publication.
Shares in Australian Zircon shed 0.1c to 3.8c.