MANILA, Philippines - MRC Allied, Inc. is set to complete a $50-million private placement from European investors next week in London, according to Benjamin Bitanga, president and chief executive officer of the company.
In a press briefing yesterday, Bitanga said he is set to sign an agreement next week in London with a group of European investors –mostly Spanish, and some British banks – for a $50 million private placement, the proceeds of which will be used to finance exploration activities in its MRC Tampakan-Kiblawan mine in Kiblawan, Davao del Sur and Columbio in Sultan Kudarat, Mindanao.
MRC’s Tampakan-Kiblawan property is adjacent to the $5.9-billion Xstrata Tampakan copper-gold project in Tampakan, South Cotabato.
According to Bitanga, under the private placement agreement, an initial tranche of $15 million would be released.
The loan would be collateralized with MRC shares at 1.5 x loan value and would carry a 6.8-percent interest rate for one year.
A key feature of the private placement is that the investors will be allowed to convert their loan either to MRC Allied shares at 0.78 centavos, or 20 percent lower than market average or they could convert their loan to shares in a new company to be created under a later planned initial public offering (IPO) in London later this year.
MRC Allied is planning an IPO offering for the new company later this year to raise an additional $100 million to fund further activities of MRC Tampakan-Kiblawan.
Bitanga said MRC is opting to do the planned IPO in London to take advantage of the recent favorable reception of the Glencore offering. He said Glencore owns 32 percent of Xstrata, which in turn controls the Tampakan copper-gold project.
“We’re hoping that those who were not able to participate in Glencore will invest in us instead,” Bitanga said.
MRC is fast-tracking its exploration activities at its Kiblawan-Tampakan to be able to confirm its resources.
Bintanga said if MRC is able to complete it exploration and verify its resources early, it might even end up being wooed by Xstrata since MRC’s property is not covered by the open pit mining ban imposed by the South Cotabato Sangguniang Panlalawigan.
MRC is intent to start development activities by 2013. Xstrata is eyeing a 2016 start of operations.