MZI to sell Keysbrook
Business News, Monday, 21 January 2019, © Copyright 2019 Business News Pty Ltd
MZI Resources has decided to explore the sale of its Keysbrook mineral sands mine after recurring technical setbacks left the company saddled with high debt.
Major shareholder Resource Capital Funds has agreed to lend an extra $US1.5 million ($A2.1 million) to MZI to give the company some breathing space.
RCF recently lifted its stake in MZI to 60.1 per cent after being issued 29 million shares to cover interest payments during the December quarter.
MZI said today it would explore a sale or other transaction that would realise the value inherent in the Keysbrook assets.
It believes a new owner may be better placed to build on existing operations with, what it called, a more conducive capital structure.
Today’s update marks a notable shift from the plans outlined by chairman Rod Baxter at the company’s annual meeting in November.
Mr Baxter told shareholders the company was still hoping to drive a turnaround in its performance, subject to obtaining adequate short-term funding and restructuring its debt repayments.
Its two main lenders, RCF and RMB Australia, have indicated they support a sale on a going concern basis.
They have both agreed to defer various debt repayments.
Azure Capital has been appointed financial adviser to the company.
It will explore options to refinance or restructure MZI’s debt in tandem with the sale process.
The problems at Keysbrook have been reflected in the company’s share price.
After trading above 50 cents per share in October 2015, its share price fell to 13 cents in October last year and has since fallen to just 3 cents currently.