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Wednesday, November 16, 2005

More cash to Bluestone

MiningNews.net More cash to Bluestone

CAPITAL hungry Bluestone Tin has unveiled a $A13.5 million convertible note raising that it says will ensure its growth strategy won't be crippled by having to enter into hedging contracts at a time of low tin prices.

The notes, which are secured, will go to clients of long-time backer Southern Cross Equities, and will have a term of four years and an interest rate of 6%.

The notes are convertible into shares at 20c, and if converted within the first two years, the holder will receive one share for each note converted and one free option exercisable at 20c.

A share and option for every two notes will be issued if the notes are converted in the third year, while no options will be issued if notes are converted in year four.

Earlier this month Bluestone initiated a rights issue aimed at raising $A15.4 million.

The 40% fall in the tin price this year was a major contributor to Bluestone recently putting its Renison Bell operation in Tasmania on care and maintenance.

The company said it is on track to commission its 3500 tonne per annum Collingwood tin project in Queensland in mid-December, while work also continues on its Tasmanian tin assets ahead of a mooted re-opening of Renison.

Last month Bluestone said it believed the outlook for tin remained positive, with the collapse of the price to around $A8500 per tonne (in October) from the $A13,000/t it was trading at when Bluestone's IPO took place attributed to the rapid growth in small scale mining that has occurred in Indonesia.

According to Bluestone, this growth followed the change in status of tin from a strategic mineral to a free mineral commodity and transfer of management of tin mining to provincial and district government. Bluestone said industry reports do not consider such levels of unofficial production are sustainable in the long term.

Collingwood is pegged to have average operating costs of $A6400/t and total costs of $A7700/t, with Bluestone recently deciding to be the owner-operator.

Meantime a tin price of $A10,000/t is believed necessary to re-commence production at the Renison operation, with the company aiming to re-start at maximum concentrator capacity (750,000tpa) to ensure efficiencies of the high fixed cost plant.

Underground ore from the namesake mine plus open cut ore from Mt Bischoff will feed the concentrator.

Shares in Bluestone were unchanged at 13.5c in midday trade.

Click here to read the rest of today's news stories.

Renison tin operation


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