Heemskirk Plans Rights Issue as Costs Rise

Heemskirk Canada Ltd of Calgary, AB has finalized the construction costs associated with the development of stage 1 of its Moberly frac sand project in British Columbia. This paves the way for execution of a construction contract precedent to the draw-down of tranche 1 US$25 million of the US$40 million debt financing facility provided by Taurus Funds Management.

Heemskirk says that the capital costs associated with construction of the plant have increased by 14% to US$23.9 million. The increased cost along with costs associated with mine haul road construction, engineering and insurances now total US$26.6 million. The increase is primarily due to the withdrawal of an electrical subcontractor and the re-tendering of the work at a higher price. The time-line for the work has also been extended from 12 to 14 months.

In order to fully satisfy the conditions precedent to draw-down under the debt financing facility and execute the construction contract, Heemskirk has made the decision to complete a fully underwritten AUS$10 million (US$7.1 million) renounceable rights issue. The implementation of the rights issue addresses the costing issues to progress stage 1 of the project. The company will also advance the engineering design work on stage 2 expanded production case of 600,000 tonnes/year.

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