TORONTO, Oct 19 (Reuters) - Mega Uranium (MGA.TO) said on Monday it plans to raise C$50 million ($48.5 million) in a public offering to help pay for feasibility studies on its Lake Maitland project in Western Australia.
The bid to raise cash comes as global capital markets open after an extended shutdown during the economic crisis and amid a brighter outlook for prices of the mineral.
The Toronto-based mining development company said it would sell 58,824,000 units at 85 Canadian cents each, with each unit consisting of one share and half a purchase warrant.
A full purchase warrant will entitle the holder to buy one common share at C$1.25 for a period of five years after the closing of the offering.
Stock of Mega was flat at 85 Canadian cents on Monday afternoon on the Toronto Stock Exchange.
The offering through a short-form prospectus in Canada and private placement to investors in the United States and other jurisdictions is expected to close on or about Oct. 26.
Prices for mined uranium, used to fuel nuclear power plants, are seen rising again thanks in part to strong demand from China.
Companies such as BHP Billiton (BHP.AX) (BLT.L), the owner of the Olympic Dam project in South Australia, which contains about one-third of the world’s known uranium, are already formulating expansion plans.
Analysts doubt, however, that uranium prices will return soon to the record levels of two years ago, when speculative buying, more than supply and demand, was the dominant market factor.
Mega’s offering is being underwritten by a syndicate of underwriters led by RBC Capital Markets and UBS Securities Canada Inc, and including Macquarie Capital Markets Canada Ltd, Thomas Weisel Partners Canada Inc, Haywood Securities Inc, Salman Partners Inc and Dundee Securities Corp.
Mega acquired the Lake Maitland uranium resource through the takeover of Australia’s Redport Ltd in December 2006.
$1=$1.03 Canadian Reporting by Pav Jordan; editing by Rob Wilson