On 20 February 2020, lithium explorer Lake Resources NL (ASX: LKE) updated the market on its capital raising initiative undertaken to advance the flagship Kachi Lithium Project and for the early close-out of the convertible securities facility.
On 10 February 2020, Lake Resources NL announced capital raising program to close out the convertible securities facility, wherein a total fund of A$3.5 million were planned to raise via private placement (A$2 million) and Share Purchase Plan (A$1.5 million) to eligible shareholders.
Want to Know in Depth Capital Raising Program Details, Please Read: Lake Resources’ Capital Raising Program: A Boost to Kachi Lithium Project and Shareholders
Apart from early-close out of the facility, the purpose of raising funds is to advance the LKE's projects starting with Kachi Lithium project.
The Kachi Project’s development plan ranges from the production of high purity samples for downstream participants (off-takers) from the pilot plant, to conducting qualification testing using the Lilac direct extraction process and the construction, transport and operation of the direct extraction pilot plant.
The raised funds are also indicated to be directed towards Kachi’s Pre-Feasibility Study optimisation, meeting the costs of the SPP Offer and the Placement, general exploration and additional funds for working capital.
Interesting Read: Lake Resources Reports Larger Grade Lithium Carbonates
In continuation to the same, on 14 February 2020, LKE announced issuing of 36,521,850 shares at A$0.04 per share to raise ~A$1.47 million before costs via private Placement to sophisticated and professional investors. Where, the balance share of next tranche, i.e. 12,500,000 was intended to be issued this week to raise a fund of A$500,000 reaching a total amount of A$1.97 million before costs through Placement.
These Placement funds may separately be considered in shortfall shares allocations after the close of the SPP.
Share Purchase Plan (SPP)
Similarly, SPP offer was made available to all Eligible Shareholders to subscribe up to $30,000 worth of new shares at an issue price same as Placement, i.e. A$0.04 per share till the time SPP offer closes on 28 February 2020. The issue price is provided at a discount of 15.8% to the 20-trading day volume-weighted average price (VWAP) before the date of announcing the capital raising program (A$0.047).
As per the company, SPP is progressing smoothly with funds already arriving.
Placement Funds to Cover SPP Shortfall
Lake Resources also intends to use separate Placement funds to cover in any shortfall shares after the close of the SPP. For the same, the Company is in negotiation with other sophisticated and professional investors to compensate for any shortfall in SPP, which may raise to A$1.5 million. LKE is planning to prepare additional Prospectus addressing Placement funds covering shortfall matters.
Closing of Convertible Securities
As of now, Cash Portion is being paid out from available cash and debt facilities for the early termination of the Convertible Securities Agreement. Also, Shares as part of the Termination Deed (i.e. 11,558,021 ordinary shares) have been issued as set out in the Prospectus.
Kachi Lithium Project – Advancing towards pre-production phase by March 2020
Kachi Lithium Project is moving towards pre-production phase and for the same around 5,000 litres is being tested before the arrival of ~20,000 litres of Kachi brine samples recently. The prior assessment is done to be sure that the ion-exchange pilot plant is performing well at the time of arrival of Kachi brine samples.
The detailed PFS is anticipated to be announced soon, which predicts production costs to stand at the lower side of the industry cost curve.
Share Price Surged Post Kachi PFS Announcement, Interested in Knowing? Please Click Here.
The Company is expected to deliver the first large samples by next month. The delivery of lithium carbonate samples to the prospective off-takers will aid in the commencement of the qualification process by the downstream groups and thus may help in further support in financing.
Stock Price Information
The stock touched day’s high of A$0.038; last traded at A$0.036 on 20 February 2020 with a market cap of A$21.37 million.
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