Australian Strategic Materials higher as balance sheet boosted through A$106 million capital raising

Petra

Proactive Investors

The funds raised puts the company in a strong position as it progresses key workstreams, including development of the Korean Metals Plant and advancing key FEED workstreams on the Dubbo Project in NSW.

Australian Strategic Materials Ltd (ASX:ASM) (OTCMKTS:ASMMF) shares have headed upwards on news the company plans to boost its balance sheet with a A$65 million placement and up to A$41 million entitlement offer. 

The company has received firm commitments from sophisticated, professional and institutional investors for the placement of about 13.5 million fully paid ordinary shares at $4.80 per share, raising $65 million in gross proceeds. 

An entitlement offer will now proceed to raise up to a further $41 million with some of ASM’s largest shareholders committing to take up approximately 29.4% of entitlements under this offer.

In this morning’s trading, ASM shares have risen as much as 5.6% to A$5.27 while the company’s market cap is approximately A$622.2 million

Strong position as workstreams progress

Australian Strategic Materials managing director David Woodall said: “We are delighted to have completed the placement component of this raising from existing and new international and Australian institutional investors.

“I am very pleased to welcome new shareholders to the company, who join our register at a truly exciting time as we finalise plans to develop our first metallisation facility in Korea.

“The funds raised significantly bolster our balance sheet, placing the company in a strong position as we progress key workstreams, which include development of the proposed Korean Metals Plant and advancing key FEED workstreams on the Dubbo Project in New South Wales.

“Importantly, we continue to advance our strategy for sustainable growth, with a primary focus on developing ASM into a globally relevant, independent and integrated metals producer by 2022.”

The placement

A total of 13,541,667 new shares will be issued under the placement under ASM’s ASX Listing Rule 7.1 placement capacity.

The offer price represents a discount of:

  • 4% to the company’s last closing price on March 23, 2021, of $4.99; and
  • 10% to the five-day volume-weighted average price of $5.35.

Settlement of the placement is scheduled to take place on April 1, 2021.

Entitlement offer details

ASM is also undertaking a 1-for-14 pro-rata non-underwritten, non-renounceable entitlement offer to eligible shareholders to raise up to a further $41 million before costs.

Eligible shareholders as at the record date of March 31, 2021, with a registered address in Australia or New Zealand, will be invited to participate in the offer at the same offer price as the placement.

The entitlement offer is expected to open on April 7, 2021, and close at 5 pm (Perth time) on 16 April 2021, unless extended.

This entitlement offer will not be tradable or otherwise transferable.

Certain large shareholders, including ASM’s largest shareholder Abbotsleigh Proprietary Ltd, who hold a combined voting power of 29.4%, have committed to take up their full pro-rata entitlements, totalling around $12 million.

The terms and conditions and further details will be set out in the offer booklet which is expected to be sent to eligible shareholders on April 7, 2021.

Copies of the booklet will also be available on the ASX and the company’s website.

Use of proceeds

Proceeds from the placement and the entitlement offer will be primarily used as follows:

  • Fund the final stage of engineering and construction of ASM’s proposed Korean Metals Plant (KMP);
  • Further engineering (FEED) work in relation to the Dubbo Project in NSW;
  • Corporate costs; and
  • Working capital and offer costs.

Petra Capital acted as lead manager and bookrunner to both the placement and the entitlement offer while Herbert Smith Freehills acted as legal adviser.