Heron to raise $91 million for Woodlawn project

Heron Resources has secured $91 million in funding which it will use to progress the Woodlawn zinc-copper project in New South Wales.

Funds will be mainly allocated towards underground mining working capital at the site ($28 million) and processing, concentrate and site services working capital ($24 million).

It will also allow commissioning of the project to be completed and to see it through to positive cash flow operations.

Heron chairman Stephen Dennis said Woodlawn remained economically and technically sound despite working capital requirements being impacted by construction delays and early stage commissioning issues.

“Heron has faced difficult financial and operational challenges commencing production at Woodlawn, with the delayed start-up severely impacting our working capital needs,” he said.

“We have now acted to address these issues, in order to realise the strong technical and operational value which Woodlawn retains, and as the project moves into full production and achieves nameplate processing capacity.”

Heron has encountered a number of issues with Woodlawn, including construction of the project being completed seven months behind schedule and a variety of plant commissioning problems.

The company, alongside external advisors, determined that the $91 million in funding is required to advance the project to cash flow positive operations and ensure it is able to pay all creditors during that period.

The funding package comprises of three parts, the first being $US35 million ($52 million) of convertible notes to be issued to Greenstone, Orion and funds managed by Castlelake.

It also includes a $35 million entitlement offer to shareholders at a price of 20 cents per share and $4 million stream over zinc by-product.

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