South Harz Potash Ltd (ASX:SHP) has received binding commitments for a placement to sophisticated and professional investors to raise A$1.25 million at an issue price of A$0.023 per share.
In addition, the company is also targeting to raise a further A$1.2 million via a one-for-15 pro-rata non-renounceable rights issue to eligible shareholders – taking the total to A$2.4 million.
The funds raised from the placement and rights issue will be used to finalise the delivery of the Ohmgebirge pre-feasibility study (PFS) targeting the use of the brownfield Bernterode shaft infrastructure as the base case development pathway.
Notably, the capital raise received strong support from South Harz directors, who will take up their full rights and partially underwrite a combined total of A$170,000 of the rights issue.
“Immense potential value”
South Harz managing director and CEO Luis da Silva said: “South Harz Board and management continue to minimise expenditure unrelated to completion of the PFS and appreciate the support of the existing shareholder base, who have demonstrated an unwavering belief in the immense potential value inherent in our flagship Ohmgebirge Potash Project.
“The team are dedicated to advancing this world-class development opportunity and committed to becoming the sustainable European MOP supplier of choice.
“We look forward to sharing these outcomes with our current and potential future investors in early CY2024.”
Cap raise summary
Under the terms of the placement, South Harz has agreed to issue about 54,134,773 new fully paid ordinary shares at an issue price of A$0.023 per share to raise A$1.25 million.
For the rights issue, up to 51,934,145 rights shares will be issued on the same terms as the placement, at an issue price of A$0.023 per rights share to raise around A$1.2 million.
The company has engaged Morgans Corporate Ltd to act as lead manager and bookrunner to the placement and rights issue.
Use of funds
Proceeds from the placement and rights issue are planned to be directed towards:
- completion of the PFS on South Harz’s flagship Ohmgebirge potash development targeting the inclusion of value engineering for the optimised brownfield scenario;
- complete commercial terms for the existing brownfield infrastructure;
- consultation for the spatial permitting process;
- continue engagement with strategic parties, and
- general working capital.