Group 6 Metals (ASX:G6M) has locked in an extra $4 million in debt funding and negotiated an extension to its near-term debt repayments to give it time to investigate potential partnerships.
The company says it plans to conduct a strategic review to determine its optimal capital structure, and to consider potential M&A activities to reposition the business and enhance the value proposition for shareholders.
Group 6, which has a market capitalisation of $32.1 million, has appointed MA Moelis Australia to complete the review.
Additionally, Group 6 has negotiated with four of its senior lenders – Abex, CJRE Maritime, Elphinstone Holdings and Pure Asset Management – to increase the limits under the existing bridge facility agreements by $4 million.
The lenders have agreed to extend the maturity dates of all near-term debt to align with the expected timing of the conclusion of the strategic review.
Interest is accrued monthly in arrears at a flat rate of 12% per annum margin. The bridge facilities, including accrued interest, are repayable on 22 November 2024.
Group 6 has been working to increase the output from its Dolphin Tungsten Mine in Tasmania, which in the second quarter of 2024 achieved a new production high of 14,606 tonnes of saleable tungsten.
The company says it has mapped out a plant recovery optimisation plan using the knowledge it has gained over the past 12 months of operations.
To further improve its cash position, Group 6 has continued a cost review of the Dolphin operations to identify opportunities to reduce operating costs in line with current improving production output.
This includes rationalising its mining fleet, with two 777 trucks demobilised and the remaining two 777s to be demobilised in the coming months.
The 150-tonne excavator will also be demobilised in the coming months, and trials of night shift mining operations will begin shortly.
These measures are expected to maximise utilisation of the mining equipment and significantly improve productivity.
Managing Director Keith McKnight says the company is encouraged by the recent results in process plant performance and recoveries following the introduction of the “high-grade” C lens.
“The mine continues to demonstrate improvement across all areas of operations and the management team have achieved a step change in production output,” he says.
“The appointment of MA Moelis comes at a pivotal time for the company, where a recapitalisation and strategic investment will underpin the implementation of the plant optimisation plan, further cost reduction initiatives and growth initiatives such as ore sorting.
“These initiatives will accelerate cashflow positive operations.”
Group 6 will seek shareholder approval for the changes to the debt facilities in late October 2024.
At the end of the June 2024 quarter, the company had $800,000 in cash and $8.95 million in undrawn debt facilities.
Write to Angela East at Mining.com.au
Images: Group 6 Metals
