Poseidon Nickel Ltd (ASX:POS, OTC:PSDNF) is raising up to $9 million as part of a capital raise to progress the potential restart of the Black Swan Project in Western Australia.
The company received commitments to raise $6 million through a private placement from new and existing institutional, professional and sophisticated investors through the issue of 171.5 million fully paid ordinary shares at an issue price of $0.035 per share.
In addition to the placement, Poseidon will also offer existing eligible shareholders the opportunity to participate in a non-underwritten share purchase plan (SPP) to raise up to about $3 million.
Looking ahead, Black Swan will be the first project to restart followed by Lake Johnston and then Windarra, with the company targeting the first production from Black Swan for the first half of 2024.
'Fill the Mill' at Black Swan
Poseidon managing director and CEO Peter Harold said: “This placement and SPP will support the company’s strategy to grow our nickel inventory and to 'Fill the Mill' at Black Swan as we move to a decision to proceed in Q2 2023 with the first production to follow in 2024.
“The funds raised will be used to convert more resources to reserves at Black Swan to expand the mine life, continue with pre-production works, order long lead items, complete the rougher concentrate feasibility study and undertake an extensive drilling program at Lake Johnston targeting Emily Ann style (+3% nickel) mineralisation.
“The company would like to thank our existing and new shareholders who participated in the placement and Morgans for their role as lead manager.”
Placement summary
The placement represents an 18.2% discount to the 5-day volume weighted average share price (VWAP) of $0.043 and a 14.6% discount to the last closing price before the trading halt of $0.041.
Post placement, the company will have about $10.5 million in cash, before the SPP.
Directors of the company have subscribed for about 2.85 million new shares for $100,000 as part of the placement.
SPP summary
Under the SPP, eligible Poseidon shareholders will have the opportunity to apply for up to $30,000 of new shares without incurring brokerage or other transaction costs.
The SPP offer period will open on Monday, December 5, 2022, and is expected to close at 5:00 pm (AEDT) on Monday, December 19, 2022.
New shares to be issued under the SPP will be issued at $0.035 per share, the same price as the placement.
The new shares to be issued under the placement and SPP will rank pari passu with fully paid ordinary shares in Poseidon.
Use of funds
Poseidon intends to use the funds raised from the placement and SPP for the following purposes:
- Immediately kick off an infill RC drilling program from the bottom of the dewatered Black Swan open pit to convert inferred resources to indicated for both the 1.1 million tonnes per annum smelter grade concentrate and 2.2 million tonnes per annum rougher concentrate projects.
- Start a 15,000-metre RC drilling program at Lake Johnston in early 2023 targeting the Western Ultramafic Unit identified by specialised geological consultants NewExco as a high-priority exploration target.
- Complete the Black Swan 2.2 million tonnes per annum rougher concentrate feasibility study during the first half of 2023 to potentially support the expansion of operations at Black Swan beyond the recently released 1.1 million tonnes per annum smelter-grade concentrate project.
- Review the exploration potential of Windarra by NewExco to identify priority targets for future exploration programs.
- General working capital purposes.