Lindian Resources Ltd (ASX:LIN) will raise $8.5 million (before costs) through a non-brokered private placement of 32,692,307 new fully paid ordinary shares at A$0.26 per share.
Funds will go towards the rapid progression of plans for a Stage 1 rare earths concentrate processing facility at its fully permitted, Kangankunde Rare Earths Project in Malawi.
Lindian will now be able to fast-track the securing of key equipment and long lead time items that underpin its plan of Stage 1 being operational in 2024.
About the placement
Lindian has received commitments for a private placement from two new investors with one investing $7.5 million and the other $1 million.
The company will also issue a total of 16,346,153 unlisted options exercisable at $0.35 per share and expiring three years from the date of issue to the placement participants, on the basis of 1 option for every 2 new shares subscribed for under the placement.
A binding commitment from executive chairman Asimwe Kabunga for an additional $500,000 shows management’s confidence in the program and takes the total placement value to $9 million.
The placement at $0.26 per share is at a near 10.5% premium to the last closing price of LIN shares on March 24, 2023. It is expected to be finalised by March 31, 2023, with new shares expected to trade the following business day.
"Reflects the appeal" of asset
“Lindian has been able to secure funds from two supportive new investors on exceptionally favourable terms. This placement is at a healthy premium to the last closing price of our shares and reflects the appeal of the Kangankunde asset and its status as one of the world’s most outstanding rare earths projects,” Lindian executive chairman Asimwe Kabunga said.
“I am extremely pleased at the progress we are making and the encouragement we have received for Lindian’s plans to become the world’s leading rare earths mine operator as further demonstrated by this placement.”
Offtake interest
Fast-tracking operations could potentially fast-track offtake agreements.
Lindian has received significant interest from rare earths industry participants interested in the project including funding and offtake.
The growing interest will see the company host participants at the site keen to view first-hand the scale of the project and the unique high-grade, nonradioactive mineralisation.
There is no formal agreement yet and no guarantee of one being made. Lindian will update the market further at the appropriate time
“I am also pleased to confirm that we are making very good headway sourcing capital to fully fund the planned Stage 1 concentrate processing facility through to first revenue, as well as project acquisition costs and predevelopment works for mine development,” Kabunga said.
“Parties have conducted site visits as part of this process and we are encouraged by the level of interest from industry participants, financiers and offtakers.
"We are being diligent and considered to ensure that we secure the most non-dilutive deal for shareholders and the best outcome for all stakeholders, most importantly the local community and the government of Malawi.”
Project development update
The Phase 1 drilling program at Kangankunde is almost finished with assays pending from the remaining 45 or so holes including those drilled in an area of the carbonatite that was identified historically as having the highest grades.
Once Phase 1 is done, Lindian will immediately move into Phase 2 of the drill program consisting of two, 1,000-metre core drill holes designed to test the continuity of the mineralisation below 300 metres.
This is expected to start after the Easter break.
Lindian expects to receive metallurgical test-work results in the very near term.
“This funding allows the company to complete our drill programs, metallurgical test-work and resource statement that will underpin Kangankunde’s status as one of the largest rare earths projects in the world, unique for its scale, grade and non-radioactivity,” CEO Alistair Stephens said.
“Concurrently, we are rapidly advancing the Stage 1 rare earths concentrate processing plant which we expect will deliver significant revenue and act as the feasibility program for development of the much larger Stage 2 expansion.
“In this context, Lindian is uniquely placed and we look forward to providing more details on our development programs as we rapidly advance towards first production.”
The company expects to deliver constant updates and news through to the delivery of the maiden mineral resource estimate next quarter and through to the end of CY2023.
Lindian was up 6.36% in morning trading.