South Harz Potash Ltd (ASX:SHP) is giving eligible shareholders the opportunity to participate in the company’s growth strategy by way of a 1-for-3 pro-rata non-renounceable entitlement offer to raise up to A$2.967 million.
The offer at A$0.01 per share follows a recent placement which raised A$1.03 million with the combined proceeds of around A$4 million to progress the Ohmgebirge Potash Project in Germany in a cost-effective, targeted manner.
READ: South Harz Potash raising up to $4 million for Ohmgebirge potash development
In the entitlement offer eligible shareholders may also apply in addition to and in excess of their entitlement for shares not applied for by other eligible shareholders as part of a shortfall offer.
In a letter to shareholders outlining the offer, executive chairman Len Jubber said it had been a significant few months for the company with a number of achievements paving the path for future production.
Potential Sollstedt acquisition
“On May 22, 2024, we reported that we had agreed key non-binding terms for the future acquisition of the neighbouring Sollstedt mine in Thuringia, Germany.
“This has delivered a transformational development pathway for our flagship Ohmgebirge Potash Development, which enables us to capitalise on the regional mining and infrastructure context in which the project is located.
“Multiple existing operating shafts on the Sollstedt tenure facilitate underground access and ventilation for mining of Ohmgebirge, significantly reducing pre-production capital expenditure relative to greenfield alternatives.
“The brownfield development of Ohmgebirge also delivers an approximate 50% reduction in surface footprint, critically including eliminating the need for interim surface waste piles.”
Ohmgebirge PFS
Jubber also wrote about the release of the Ohmgebirge Pre-Feasibility Study (PFS) in May 2024, incorporating “the core brownfield development and operational features which would be facilitated by the targeted Sollstedt acquisition”.
He said: "The PFS demonstrates that it is possible to develop and operate a world-class potash mine in Germany, in the heart of Europe, profitably and responsibly in the modern era.
"It is important to note that the Sollstedt acquisition is dependent upon a number of factors including the completion of satisfactory due diligence, the consents of relevant Government authorities, the execution of binding documents which are currently under negotiation with its current owner, Deusa International GmbH, and South Harz achieving full project financing and making a final investment decision for the development of Ohmgebirge.
"If South Harz is unable to acquire Sollstedt it will not be able to proceed with the development of Ohmgebirge as detailed in the PFS."
Material upside
He said the PFS confirmed that there was material further upside potential from a range of additional synergy opportunities delivered by the Sollstedt transaction, but these had not yet been evaluated or incorporated into the company's development and operational planning.
“Included in these opportunities is the potential mining of substantial residual potash within the Sollstedt mine, proximate to existing underground infrastructure, which could deliver life of mine extension and/or increased output rates for Ohmgebirge in early years.”
READ: South Harz Potash receives spatial planning green light for flagship Ohmgebirge development
The chairman also outlined granting of the Spatial Planning Assessment for Ohmgebirge, stating: “The published decision of the regulator (TLVwA) confirms the compatibility of all submitted Ohmgebirge site options with regional planning requirements, while also expressing a preference for the use of the Bernterode-Shaft and, for processing facilities and logistics, the designated industrial area at Leinefelde.
“A strong base”
“The decision provides a strong base for the future development of Ohmgebirge and speaks volumes to the constructiveness of the entire Thuringia region to new critical minerals development.
“It also validates the world-class environmental and sustainability features that we have incorporated into our Ohmgebirge development and operational planning.”
Jubber wrote about the lower cost, internal project optimisation phase that South Harz is undertaking following completion of the Ohmgebirge PFS.
“This next phase will also provide the opportunity for value engineering processes to be undertaken on Ohmgebirge, as well as the evaluation of various strategic alternatives towards long-term project advancement and financing.”
Offer prospectus
A prospectus pertaining to the entitlement offer and shortfall offer has been provided to ASX and is available to view on the ASX website and the South Harz website at https://southharzpotash.com/investors/asx-announcements.
In conclusion, Jubber wrote: “I believe the future for South Harz is bright and I look forward to keeping you updated over the journey ahead.”