Eastinco Mining & Exploration PLC ("Eastinco") (NEX:EM.P)  has announced a 2Q20 update on it key projects in Rwanda and announced it is looking to re-enforce its balance sheet with a US$200,000 loan and asked shareholders to convert existing warrants. 

 

Project Updates 

Kuaka 

The development of the wash plant at the Company’s initial project is nearing completion. The wash plant was fortunately procured and shipped from China in November 2019 with delivery in January 2020 prior to any supply chain disruption. Ultimately, the wash plant will have a capacity to process approximately 25 metric tonnes of ore per hour. Once operational the wash plant should provide cash flows for the business as originally planned. However, completion of the wash plant is approximately four months behind schedule. 

 

Huye 

The Company recently announced a second joint-venture project and the Company has already begun early exploration of the 600-hectare greenfield site. This site offers an enormous potential for tantalum, tin, and tungsten minerals. Again, with minimal capital expenditure the Company will either prove or disprove the viability of this site for a detailed drilling programme and full-scale mining. 

 

Others 

The Company has applied for an additional two further exploration licenses for sites in excess of 3,000 hectares in aggregate and hopes to hear from the Rwanda Mines, Petroleum and Gas Board (the "RMB") before the end of the calendar year.  Both sites have been inspected by geologists and offer strong potential for significant resources. 

 

Call for Capital 

Given construction of the Kuaka wash plant is approximately four months behind schedule, there has obviously been a corresponding four-month shortfall in revenue and cash flow. This delay has therefore consumed a significant portion of the Company’s cash reserves.  The Company has therefore arranged to secure debt and raise new equity capital. 

 

Debt 

The Company has arranged to enter into a U.S. $200,000 working capital facility agreement (the "Facility) with Augustin Corp.  Augustin Corp. is a U.S. investment company owned by a trust benefitting family members of Charles Bray, the Executive Chairman of Eastinco. The Facility is secured against the physical assets of Eastinco Limited and is provided for a term of up to 18 months at an interest rate equal to 6% above commercial lending rates. 

 

New Equity Capital 

In addition, the Company is seeking to raise new equity capital, in the first instance from the shareholder exercise of the existing warrants held by warrant holders at a 2.0 pence exercise price.  

The Company is seeking conversion of 30% of the outstanding warrants, which would raise £827,000 on or before 15 April 2020 on a pre-money valuation of approximately £5.5 million. If the Company receives greater than 20% of the existing warrants converted, it will not seek any additional capital from outside equity providers.  

Furthermore, existing shareholders without warrants who wish to participate in the conversion process, can also participate in the capital raise by contacting management. Those existing shareholders on the register will be offered some warrants to exercise.  

The Company will announce the result of the warrant conversion exercise by the end of the month.  

 

Use of Funds 

Approximately £250,000 of the funds raised will be designated for use for the further exploration of the Huye and Kuaka sites, £400,000 for Kuaka related working capital, and the balance £177,000 to acquire new licenses and land from stressed sellers in Rwanda.  

Executive Chairman, Charles Bray stated: "This transaction will enable Eastinco to pursue new and valuable exploration licenses at an opportune time. I am pleased that my family can support the company at such a critical juncture."