The Wiluna Mining share price has been frozen for a month. What’s happening?

The ASX gold miner could remain halted for weeks to come.

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Key points

  • The Wiluna Mining share price has been frozen since 6 May as the company first organised and now executes a capital raise 
  • The company is raising between $50 million and $84.5 million through an entitlement offer. Shareholders can buy one new share for each share they already own for 40 cents apiece
  • The funds will help the company to deleverage Wiluna Mining’s balance sheet, improve its working capital position, and de-risk its business following a period of challenges outside its control

The Wiluna Mining Corporation Ltd (ASX: WMC) share price is currently 56.5 cents – the same as it has been for an entire month.

The gold mining company put its stock in the freezer back on 6 May and it hasn’t resurfaced yet.

So, what’s keeping the Wiluna Mining share price on ice? Let’s take a look.

Why is Wiluna Mining still frozen in June?

Fans of Wiluna Mining shares might have had a slow month as the stock remains halted, but hope is on the horizon. Wiluna Mining could return to trade within the next fortnight.

The company is currently working on “recapitalising” after a difficult period of operations.

The recapitalisation project – which appears to have taken the form of a pro-rata entitlement offer – was announced to the market 12 days after the company first entered its ongoing trading halt.

The capital raise is designed to deleverage Wiluna Mining’s balance sheet, improve its working capital position, and de-risk its business.

It came after the company struggled against numerous happenings outside its control, including:

  • The COVID-19 pandemic and resulting labour shortages in Western Australia;
  • Delays to the sale and monetisation of gold concentrate born from Russia’s invasion of Ukraine; and
  • Supply chain issues delaying the commissioning of the WilTails plant.

The challenges saw the company with around $8 million of cash and an anticipated net cash outflow of $24 million (after sales) required to normalise its creditors and receivables.

Thus, Wiluna Mining decided to enter a longer-term trading halt. Doing so allowed it to manage its disclosure obligations while continuing discussions of a recapitalisation with financiers.

Wiluna Mining undergoes capital raise

Now, the company is undergoing an entitlement offer wherein eligible shareholders can subscribe for one new share in the company for every share they already own at a cost of 40 cents per new share.

The offer price represents a 29.2% discount on Winula Mining share price’s last close, a 42.4% discount to its 10-day volume-weighted average, and a 46.3% discount to its 30-day volume-weighted average price.

Participating investors will also receive a new option for every share received. The options will be exercisable at 60 cents and expire at the end of 2024.

The capital raise is expected to line the company’s pockets with an additional $50 million to $84.5 million.

The offer opened on 1 June. It’s expected to close on Friday with the new shares tipped to trade as normal from 20 June.

Though, those looking to trade Wiluna Mining shares might want to hold their excitement for now. The company’s current trading halt appears to cover the entirety of this month.

Wiluna Mining share price snapshot

This year was a tough one for the Wiluna Mining share price prior to its ongoing trading halt.

It tumbled 40.5% between the start of 2022 and 6 May. It’s also currently 33.5% lower than it was this time last year.

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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