Premier African Minerals announced a placing today to raise £0.4m before expenses at an issue price of 0.16p per new ordinary share, it announced on Friday.
The AIM-traded firm said the net proceeds would be used to cancel all the existing warrants held by Darwin Capital, and for general working capital purposes.
It said it agreed with Darwin that the entire holding of 205,354,165 warrants held by Darwin would be cancelled, for a cash payment by Premier of £0.15m.
The Premier board said it believed that the continuing existence of the warrants, which had downwards adjustable exercise prices and required Darwin's advance permissions for certain share issuance, created an overhang, and that the cancellation was in the best interests of shareholders.
It said the payment for the warrant cancellation reflected the board's assessment of the fair value of the Darwin warrants based on a Black Scholes valuation.
"Premier has today issued by way of a placing, conditional on admission, 250,000,000 new ordinary shares
at a subscription price of 0.16p per placing share," the board confirmed.
Premier also gave an update on the RHA Tungsten Mine, having announced on 16 January that it had commenced discussions with the National Indigenisation and Economic Development Fund, which has an interest of 51% in RHA, in respect of agreeing a mechanism to restructure its ownership of RHA.
It said those discussions continued, and a further announcement would be made in due course.
"The existence of the warrants constituted a capital overhang and a potential difficulty in concluding negotiations currently underway," said Premier CEO George Roach.
"Worth noting that no additional shares have been issued to Darwin in closing out their warrant position."
Roach said Premier would bring the discussions with NIEEF to finality in the "very near future".
"Premier proposed and the board of NIEEF are in principle supportive to the conversion of Premier's loan account into equity in RHA, Premier would as a result of this conversion own 90% of RHA.
"We are assured that the current procedural delays will not persist."
Roach added that the board was "encouraged" with how the discussions with potential partners to progress Zulu had advanced.
"Refinements to the work programs and DFS process and requirements are ongoing and we expect that as soon as the persistent rains abate, and we bring the discussions underway to finality, accelerated work will resume at this very exciting deposit."