Suvo Strategic Minerals Ltd (ASX:SUV) has secured firm commitments to raise A$1.6 million before costs through a share placement at $0.023 per share.
The placement was oversubscribed with strong support received from new and existing sophisticated investors.
This capital raising coincides with a critical review of the company's projects by CEO and MD Hugh Thomas and founding shareholder, Aaron Banks, who recently assumed the role of interim chairman.
The strategic evaluation, initiated after the appointment of Thomas in April 2023, has resulted in the definition of a clear path to increase hydrous kaolin sales and distribution.
Over the next 12 months, Suvo intends to bolster its sales of hydrous kaolin within the Asia Pacific region, capitalising on the newly acquired industry knowledge of trends and market dynamics.
Increase sales of hydrous kaolin
Thanking the shareholders, Thomas said: “On behalf of the board, I would like to thank our new and existing shareholders for their support in the over-subscribed placement.
“The placement was necessary to provide additional working capital to the company as we expand our sales team and technical knowledge.
“Our number one focus is to increase our sales of hydrous kaolin in the Asia Pacific region, to match production capacity following the recent plant upgrade at Pittong.
“I assure all of you that significant progress has been made in building strong new relationships in Asia-Pacific and understanding the chemistry of the company’s product basket, any limitations and the numerous opportunities we have as Australia’s only hydrous kaolin producer.
“Significant headway has been made in defining and augmenting Suvo’ sales and distribution strategy.
“Suvo remains fully committed and we thank our loyal shareholders for their patience and support.”
Placement summary
Suvo will issue 69,565,217 fully paid ordinary shares to new and existing sophisticated investors participating in the placement at $0.023 per share
This represents a 22% discount to the 15-day volume weighted average price (VWAP) and an 8% discount to the last closing price.
Furthermore, 5 million unlisted options will be issued to PAC Partners Securities Pty Ltd, the lead manager for the placement. These options will expire three years from their date of issue and are exercisable at $0.06.
Use of funds
Suvo’s management is poised to explore short-term opportunities to sell the additional hydrous kaolin tonnes from its Pittong plant in Victoria
The capital funding from the share placement will allow the new management to execute this new offshore market strategy and maximise its potential in preferred end-user markets and higher-margin industries.
The company has revised the forecast production guidance, initially released in August last year, following this strategic change.
This revision is designed to yield improved long-term results for the company and its shareholders. The company further confirms it has performed in line with the 9-month guidance released in August 2022.
In corporate activity, chief executive officer Hugh Thomas has been appointed managing director while non-executive director Henk Ludik has resigned from the board.
Interim non-executive chairman Aaron Banks has thanked the former director for his service and acknowledged his critical role in optimising the Pittong plant operations.
Banks also congratulated Thomas on his appointment and hinted at bolstering the board in the coming months to meet the company's evolving needs as it transitions into a significant premium hydrous kaolin supplier in the Asia Pacific region.