Australia’s Alkane Resources ALK.AU -3.33 percent is on the prowl for funds, with a billion-dollar target in its sights.
The mining hopeful will be looking to tap up sources across capital, debt and equity markets, and will also be examining possible government involvement to help fund its Dubbo Zirconia project in New South Wales state.
While access to funding has become increasingly difficult amid protracted concerns over global growth, Alkane is optimistic it will be able to secure the package in the next 12 months.
The move comes at a time when rare earth prices are languishing, and exports from China – which produces most of the world’s rare earths – have been weak. According to data from Hong Kong-based China Customs Statistics Information Centre, China’s exports of rare earths in the first nine months of this year barely reached a third of the government’s 2012 export quota.
Still, “while global economic woes persist, there are robust outlooks for many of the Dubbo Zirconia project’s products,” Edison Investment Research said in a recent note. It added that Alkane has de-risked its future revenues through agreements with third-party companies for all the material due to be produced there.
Securing the intended 1 billion Australian dollars (US$1.04 billion) package will give Alkane the funds it needs to push ahead with construction in the final quarter of 2013, just as final project approvals are received. The company, which raised A$107 million in March to help move both Dubbo and its Tomingley gold project forward, aims to produce zirconium, niobium and rare earths at the site.
Alkane said Thursday it has appointed Credit Suisse CSGN.VX +0.09 percent and Petra Capital as joint lead managers and bookrunners for a possible equity raising, which Credit Suisse would underwrite.
Credit Suisse and Sumitomo Mitsui Banking Corp. have also been appointed Alkane’s financial advisers, and will look to set up a debt facility for the company. Alkane said the pair will also examine the potential sale of a minority interest in the project.
Separately, Sumitomo will be the sole lead coordinator for export credit agency deals, or any other available government assistance programmes, Alkane said in a statement.