YTC RESOURCES LIMITED (YTC)Raises New Funds to Accelerate...

YTC RESOURCES LIMITED (YTC)
Raises New Funds to Accelerate Exploration

YTC Resources Limited has agreed to an equity funding deal with private equity fund Pacific Road Capital (“PacRoad”) for up to $25m. Phase 1 of the transaction involves the immediate placement of 58.8m shares at a price of 24.3c per share to raise $14.3m, representing a ~22% premium to the 5th of December closing price of 20c.

YTC is as a fully funded developer and quality explorer. We have updated our valuation following the latest issuance. Our valuation for the Company remains largely unchanged at 58cps and our 12-month price target is 65cps.

We continue to recommend the Company as a Buy.

Phase 1 Funding PacRoad Gets ~18% Shareholding in YTC

Phase 1 funds will be used to accelerate exploration, for resource development at the Hera-Nymagee projects and for additional working capital. Upon completion of Phase 1 of the deal, PacRoad will have an ~18% shareholding in YTC and the right to a Board position.

Should YTC elect to raise additional funds after Phase 1, PacRoad has the first-right to subscribe for equity worth up to $10.7m (Phase 2 funding), priced at a 30 day VWAP from YTC’s call but at PacRoad’s election. Up to $5m of Phase 2 funds may be used to service debt or for Hera project cost overruns, if applicable. Phase 2 funding, if required, is subject to shareholder approval and PacRoad has a non-dilute right, for so long as a >10% holding is maintained.

Strong Endorsement for the Projects

The transaction follows an extensive due diligence process from PacRoad and, in our view, is a strong endorsement of the Hera-Nymagee Project and for expected exploration upside within the basin. The deal is complimentary
to the Glencore development funding package and provides funds to accelerate exploration and resource extension programs to increase mine life. We see the addition of PacRoad to the YTC register as a very good outcome for the Company. PacRoad provides capital for mining projects
throughout the world and has a strong technical background in project developments and operating assets.

Glencore also have a non-dilute clause and now has ~1 week to subscribe for new shares in YTC under the same terms as PacRoad. To maintain their ~9.7% interest Glencore would need to receive ~5.7m shares for ~A$1.4m, otherwise it will be diluted to ~7.9%.

Expanded Exploration Program for 2014

YTC expects that exploration activities will be expanded in 2014 and in the coming weeks will detail the prospects to be explored. We see significant exploration potential for Nymagee North, where a high-priority target is still
to be resolved and drilling completed to date continues to be consistent with the upper part of a Cobar-style deposit. YTC also has multiple near-mine targets requiring further work, in and around the Hera and Nymagee deposits and at the Federation prospect located ~12km south of Hera.

The deal provides funding to unlock exploration potential within the Cobar Basin, adding “exploration sizzle” to the Hera development which is progressing very well (on budget and now ahead of schedule).