Phoenix Copper (LON: PXC) shares are up 18% in London this morning on an announcement about their intended copper bond. Which we think is really rather odd - for we would expect difficulties and delays in getting that sorted and away to move the PXC share price downwards. But, clearly, we’re wrong. Or, perhaps, we’re only wrong so far.
Here is the actual thing Phoenix is trying to do: “It remains our intention to fund construction of this first mine, which will give us production and financial autonomy, with minimal additional dilution to shareholders. With this objective in mind, we are currently finalising the documentation to create a class of authorised bonds in a total amount of $300 million, and to admit them to trading on The International Stock Exchange ("TISE") in the Channel Islands, as a prelude to closing an initial tranche to raise up to $80 million. We have been in discussion with a number of interested parties for some time, and we are hopeful that we can finally close the book in the near future. We share the frustration that this apparent delay has caused, but we have to acknowledge that we are trying to raise multiples of our current market capitalisation, and that the market remains turbulent, to say the least. Although there can be no certainty until the bonds have been issued and settled, we are confident that the issue will close and that the Company will have access to the relevant construction funding when required.”
That is, really, very ambitious. The reason they’re not using a syndicate of banks is presumably because they’d like more capital underlying the financing. Trying to use bonds instead - without the extra capital - is, we think, very ambitious indeed. So much so that we’d worry about whether it can be done.
Phoenix Copper share price from Google Finance
Which leads to today’s announcement: “Phoenix Copper Ltd (AIM: PXC, OTCQX ADR: PXCLY), the AIM-quoted USA-focused base and precious metals company confirms that the Initial Term of the short-term $2,000,000 loan facility, first announced on 24 March 2023 (the "Loan Facility"), has been extended by approximately two weeks until 8 December 2023. The Company has requested this extension in order to allow sufficient time to conclude discussions with cornerstone investors regarding the Company's corporate copper bond issue, as disclosed in the Company's interim accounts dated 28 September 2023.”
That the interim finance is being extended is good, obviously. But the hesitation on people committing to the copper bond - that’s what we’re saying above, that we think that’s a terribly ambitious - ie, unlikely - financing source. Of course, we could be wrong, but perhaps, as we say, we’re only wrong so far?
