South Harz Potash Ltd (ASX:SHP) is raising $3 million in a placement to boost its capital position and assess near-term value-adding initiatives as part of the pre-feasibility study (PFS) at Ohmgebirge Project in Germany.
These funds will assist the company to conduct strategic partnership discussions for long-term investment, JV partnerships, royalty funding and offtake streams.
The company has received firm commitments for a placement of new ordinary shares to a range of new and existing sophisticated and institutional investors, including directors and management, who are subscribing for A$625,000 of the placement.
This money is set to put SHP in a strong position as it continues PFS workstreams with targeted completion in the fourth quarter of 2023.
“I would like to thank both new and existing shareholders for their strong support in this capital raising," South Harz CEO and managing director Luis da Silva said.
"This support affirms our view that the South Harz Project is a world-class opportunity and compelling investment proposition.
"The additional funds are expected to provide additional working capital and ensure we are in a stronger position as we seek potential strategic partners.”
Use of funds
Importantly, SHP’s Erfurt headquarters now has the core staff for an owner’s team undertaking early-stage PFS desktop workstreams.
Given this is in place, the raised funds can be applied directly to the delivery of the Ohmgebirge project’s value-adding initiatives.
Future spend will mainly comprise of consultants’ fees and project permitting in the absence of further exploratory drilling and ease of access to a bulk sample.
The near-term focus of Luis da Silva, who was recently appointed CEO and MD, is to drive optimisation of the Ohmgebirge advancement and development strategy to ensure optimal study and project delivery.
Ohmgebirge PFS activities are progressing in line with the overall project schedule.
Milestones in play
SHP is eyeing off several important milestones in the near term including key site selection determinations, with a selection decision to be advised in accordance with the company’s permitting timetable.
Results of the K-UTEC bench metallurgical test results are due this quarter and are expected to confirm scoping study assumptions and inform a processing route with associated recoveries.
In the next month, bulk ore samples are set to be extracted from the boundary area of its neighbour’s site and undergo pilot plant testing at K-UTEC. Once the detailed CEO-led work plan and PFS optimisation activities are done, South Harz expects to make several near-term key study consultant appointments.
“Our newly strengthened board and management team are focused on shaping the future of the European potash market," da Silva said.
"We are committed to advancing Ohmgebirge to unlock the full potential for what is a globally significant asset base, with low projected operating costs in a G7 jurisdiction in the heart of Europe.
“My immediate focus is leading the South Harz team through the detailed PFS work plan finalisation and delivery optimisation process to ensure we deliver our study and project outcomes cost-effectively. Early phase Ohmgebirge PFS workstreams are advancing on schedule and we remain on track for PFS completion by end Q4 2023.”
Placement details
SHP will issue 66,666,666 new fully paid ordinary shares at A$0.045 per share to raise a total of A$3 million in new equity proceeds (before costs).
The placement issue price represents an approximate 5.3% discount to the market close on Friday, November 11.
It comprises the issue of 52,777,778 shares at A$0.045 per share raising A$2,375,000 and the balance of 13,888,888 shares raising A$625,000 to be issued to South Harz directors (or their respective nominees and subject to shareholder approval).
Shares are expected to be issued on or around November 24, 2022.