Australian Strategic Materials Ltd (ASX:ASM) has fielded strong support from leading international and domestic institutions in a placement to raise $30 million and is seeking to raise a further $10 million in a non-underwritten share purchase plan (SPP).
Funds raised in the institutional placement and subsequent SPP will primarily be used to accelerate activities at the company’s Korean Metals Plant (KMP) and to progress the Dubbo Project in NSW.
Bell Potter Securities Limited acted as lead manager to the placement which has attracted strong interest from domestic and international institutional investors, with demand significantly exceeding shares available.
Support welcomed
ASM chief executive officer Rowena Smith welcomed the strong support from new and existing investors.
“With our Korean Metals Plant producing commercial quality metals and our Dubbo Project ready for development, ASM is well positioned to secure project financing and execute our mine-to-metals strategy,” she said.
“The commercial environment for rare earths, critical minerals and high-tech metals goes from strength to strength, and with Dubbo’s strong business case, we are looking forward to the opportunity to be a valuable contributor to the global energy transition.
“I am especially pleased that we are welcoming new shareholders to ASM and giving our existing shareholders the opportunity to show their continued support for ASM through the SPP.”
Director participation
Directors have also provided a strong endorsement of the company and its strategies by participating in the capital raising.
This also demonstrates continuing support for the long-term value proposition offered by the advancement of ASM’s key projects.
Chairman and major shareholder Ian Gandel intends to contribute $4 million to the placement while non-executive director Kerry Gleeson has indicated her intention to contribute $50,000.
This participation will require shareholder approval will be sought at the forthcoming ASM Annual General Meeting.
Other directors of the company will participate in the SPP.
Use of funds
Funds raised from the capital raising, together with existing cash and sources of liquidity, will be used to accelerate development of ASM’s KMP and its Dubbo Project, with proceeds to be applied as follows:
- secure KMP feedstock inventory to support metals production and in turn assist with near-term customer acquisition;
- accelerate offtake marketing and strategic partner discussions in relation to funding the Dubbo Project;
- commence early works on road, bridge and rail infrastructure that are important for site access; and
- manage corporate costs, general working capital and costs associated with the capital raising.
The placement comprises the issue of 17,341,200 fully paid ordinary shares in ASM at an offer price of A$1.73 per new share, which represents a discount of:
- 12.4% to the company’s last closing price of A$1.975 on October 28, 2022; and
- 16.4% to the 10-day volume weighted average price of A$2.069 on October 28, 2022.
Settlement of the new shares, other than to directors, is scheduled to occur on Monday, November 7, 2022.
SPP details
Eligible ASM shareholders at the record date of 5pm (AWST time), November 1, 2022, with a registered address in Australia or New Zealand will be invited to participate in the SPP.
They will be able to apply for up to A$30,000 worth of additional ASM shares at the placement offer price of A$1.73 per new share and subject to scale back at the company’s absolute discretion.
The SPP is expected to open on November 9, 2022, and close at 5pm (AWST time) on November 18, 2022, unless extended.
Further information regarding the SPP will be made available to eligible shareholders in an offer booklet to be released to the ASX.