Alliance Mineral Assets said it entered into a deal with Hong Kong-based Burwill Holdings' unit to place A$19.6 million of shares after auditors flagged uncertainty about the mining firm's ability to operate as a going concern.
Burwill Commodity, a subsidiary of steel trading firm Burwill Holdings, will buy shares in four tranches. The pricing of the placement represents a discount of up to 10 percent to Alliance's volume weighted average price of S$0.2972 on September 29.
The placing comes as auditor Ernst & Young's raised doubt about the Perth, Australia-based Alliance Mineral's ability to continue as a going concern, if it is unable to raise more funds.
The auditor flagged a pre-tax loss of A$4.80 million (S$5,119,580) for fiscal 2017, and A$4.08 million for fiscal 2016.
"The company's cash flow forecast reflect that the company will need to raise additional funds during the quarter ending December 31 2017 to enable it to meet its committed and planned capital expenditure in the Bald Hill project and for on-going working capital requirements," the report said.
Alliance said that it will be able to remain as a going concern, citing the capital that will be raised through the Burwill placement.
Shares in Alliance Mineral Assets fell 1.7 percent to S$0.29 on the Singapore Exchange. The stock has soared 224 percent so far this year.