Niuminco ditches rights issue, but needs cash fast
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Struggling gold miner Niuminco is short of cash and running out of options.
The company (ASX:NIU) had just $1000 in the bank at the end of December but has pulled a rights issue it desperately needed to raise cash.
During the quarter Niuminco had raised $105,000 from a placement to a sophisticated investor and booked $99,000 from gold sales.
But the kitty was down to just $1000 with a $340,000 cash burn predicted for the current quarter.
Niuminco did note that it was expecting to bank $340,000 from gold, silver and other sales.
About $180,000 of that was allocated to exploration, development and production and the rest would be spent on staff and admin.
Niuminco announced earlier this week that it would undertake a 1-for-3 rights issue to raise up to $933,386. Of this, $300,000 was to be underwritten by companies associated with Niuminco’s directors.
The company was planning to use the cash to buy plant and equipment and continue exploration in Papua New Guinea.
But Niuminco said it would now not be going ahead with the rights issue because it needed to issue a prospectus instead of just relying on a “Section 708AA Notice” that shows it is in compliance with the Corporations Act.
Niuminco was forced to address an ASX query back in September last year about a wind up notice the company said in July had been settled for $21,672.78, and its continuing negative cash flows.
At the same time, it revealed it had also lost two exploration permits in Papua New Guinea because it wasn’t granted an extension for them.
Niuminco said at the time that it needed 75-80 ounces of gold a month from its now producing Edie Creek mine to get its cash flows out of negative territory.
And it is getting there slowly, but still only produced 62 ounces for the entire December quarter.
The company said it will update the market if it decides to pursue “alternative capital raising options”.
Niuminco has been contacted for comment.