Bass Metals Limited (ASX: BSM) is a producer of industrial mineral concentrates from its 100% owned and debt-free Graphmada Large Flake Graphite Mine. During FY18, the company was focused on the implementation of a number of operational improvements as part of its Operational Optimisation Program (stage 1). Mining and processing activity was ceased during this phase. After the completion of the Program in May 2018, BSM commissioned the plant in June 2018. Additionality, BSM continued with care and maintenance activities related to its Tasmanian exploration and evaluation assets.
New Issue Announcement: The company as on 28th June 2019, issued 176,250,000 Convertible Notes with face value for each note at $0.008 and maturity date of 15th June 2021.
Capital Raising Program: The company recently announced that it has entered into an agreement with Bizzell Capital Partners Pty Ltd and Morgans Corporate Ltd to raise up to $4 million through the issue of Convertible Notes. As per the principal terms, the amount of up to $4 million will be raised at the face value of 0.8 cents per Convertible Note and interest rate of 15% per annum. Interest will be paid half yearly in arrears and the interest may be paid in at BSM’s election by the issue of further Convertible Notes. Maturity Date is on 15th June 2021. As per the conversion terms, the Notes will be convertible at any time at the Convertible Note holder’s election into one ordinary share in Bass subject to usual adjustment mechanisms in certain circumstances. The company also mentioned that these Convertible Notes will be secured over the assets of BSM.
The company informed that cornerstone investors have subscribed an initial tranche of $1.41 million related to this Convertible Notes, which has been issued as on 28th June 2019. BSM is offering the placement of Convertible Notes to sophisticated and professional investors, which also includes participation from existing shareholders of the company. The commitments have also been received for a further tranche of $1.1 million of Convertible Notes. This also includes $85,000 from Directors and issuance of Notes to them will be subject to receipt of necessary shareholder approvals.
Use of the Funds: The company planned to deploy this fund for additional exploration with an emphasis on drilling at the highly prospective Mahela deposit. The partial fund will also be used to sustain the capital expenditure and continued stage 2 expansion works. General working capital will also partially use this fund.
Capital structure post Raising: The company will have 2,810 million Ordinary Shares, 302 million Listed Options (ASX: BSMOC) and up to 500 million Unlisted Convertible Notes.
Graphmada Large Flake Graphite Mine: The company has developed a long-term growth path with established production at Graphmada and reaching to a phase where it expects the substantial growth in volumes and lower production cost with declining capital intensity. The company plans to further strengthen this platform by accompanying extensive exploration. For the purpose, the company has achieved all the permits and landholder agreements with established mineral resources. Sales channel has been established with significant infrastructure and logistics for expansion in place. With the strong demand for large flake concentrates, the products are largely accepted in the market. With the excellent community and government relations and drilling programs going on, the company has set significant exploration targets.
With the 100% ownership of BSM in Graphmada Mine, located at Madagascar, mineral resources of 9.2 Mt @ 4.2% total graphitic carbon, extensive exploration program is underway. With low C1 operating costs and target production of >20,000 tpa concentrates, and ~110 km to Madagascar’s main export port, the output is currently served to the USA, Europe and India.
Bass aims to materially increase its Mineral Resources in support of long-term growth and economies of scale, with significant exploration potential now identified in addition to existing Mineral Resources.
Bass is subject to a number of risk factors such as (a) to meet operating and capital expenditure estimates or achieve production targets as planned cannot be assured, (b) no assurance to realize any particular recovery level of graphite, (c) laws and regulations concerning the environment, (d) external financial and credit market assessments, and its own financial position, etc.
Sales and Exports Growth Update: The company recently provided an update related to its sales activities at Graphmada Large Flake Graphite Mine. It anticipates the sales receipts for the June 2019 quarter to be in the range of $550,000 to $700,000, which is a significant rise as compared to March 2019 quarter of $328,000. Shipments for the quarter to date (to 17 May 2019) stood above 450MT and the Management believes that it is on track to achieve shipments in the range of 900MT–1,000MT for the quarter. In addition to that, the company has been receiving good traction from global interest and demand for its premium product.
Quarterly Activities Report for March 2019: The company recently provided the quarterly report for March quarter 2019 explaining its progress for the period. The company completed the auger drilling at Mahela, highlighting the prospect for additional resources. Mining haulage operations also saw some signs of improvements along with two trucks to combat heavy rainfall during the March quarter. The company installed additional processing capacity with two attritioning cells, assisting the delivery of a consistent 94% Fixed Carbon grade across all concentrate sizes. The company sold and shipped 734MT of graphite concentrates to new and existing customers, which was an upgradation on a sequential basis. Forward orders for the quarter stood at 730MT. Total revenues for the June quarter is likely to surpass 1,000 MT, depicting the continued growth and improvement. Cash and receivables on the balance sheet as at 31st March 2019, stood at $3.3 million, with 100% ownership of the asset. Balance sheet remains debt free at the end of the period.
At the market price of $0.008, the stock was trading close to its 52-week low of $0.007. In today’s trading session, the stock was down 11.111%. The market capitalisation of the company stands at $25.29 million on 28th June 2019.
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