Kalium Lakes Limited (ASX: KLL) is in the business of exploration and development which is based in Balcatta, WA. The current aim of the company is to produce Sulphate of Potash (SOP) which is a high yield, premium fertiliser, from its Beyondie Sulphate Of Potash Project in Western Australia. Currently, no production of SOP is there in Australia.
On 3rd April 2019, the company announced it has secured a conditional cornerstone equity investment with respect to Kalium Lakes' Beyondie Sulphate of Potash Project. The investment of up to $A20.8 million would be made by Greenstone which is part of the Greenstone Resources II LP group.
The equity investment will be made by Greenstone via a two-tranche placement of 47,305,588 fully paid ordinary shares at a price of A$0.44 per share, which is subject to the satisfaction of some conditions. This investment of A$20.8 million represents 19.99% of the shares on issue in Kalium Lakes as per current capital structure.
There are other strategic support arrangements that these companies have entered into, to assist in the development of the Company’s projects. Mr Stephen Dennis has been nominated by Greenstone as a director in accordance with its rights under the Subscription Deed.
This placement announcement has come after the recently announced binding off-take agreement with K+S plus the securing of project debt funding, consisting of up to A$74 million from NAIF and A$102 million from KFW/Euler Hermes.
The funds from the proceeds will be used for pond construction, bores, trenches, pumping equipment, accommodation village installation, purchase of long lead items, RFDS airstrip, administration and workshops.
Brett Hazelden, Managing Director of Kalium Lakes stated that with the calibre of investment partner Greenstone, Kalium Lakes will be able to continue its speed to achieve the first commercial SOP production in Australia next year. The company’s project financing pathway seems to be clear now after the equity placement, and terms recently agreed for debt funding of up to A$74 million from NAIF and A$102 million from KFW.
He is also pleased to welcome Stephen Dennis to the Board who is currently the Chairman on five ASX listed Boards and has been actively involved in the mining industry for over 30 years. He will join the board after the completion of the placement.
Some of the conditions in accordance to completion of the Placement and triggering of the Board nominee right, Project Steering Committee and Anti-Dilution Right are:
- The Company needs to obtain a standard waiver from ASX from ASX Listing Rule 6.18.
- No material adverse change should occur in relation to Kalium Lakes.
The Placement will utilise Kalium Lakes' existing issue capacity as follows:
- Tranche 1 - the issue of 18,904,487 shares under the Company's Listing Rule 7.1A capacity will be issued within 5 business days following execution of the Subscription and Co-Op Agreement
- Tranche 2 - the issue of 28,401,101 shares under the Company's Listing Rule 7.1 capacity will be issued within 13 business days of execution of the Subscription and Co-Op Agreement.
The company’s stock closed lower by 1% at A$0.495 as of 3rd April 2019. In the last six months the stock has given a return of 16.28% while YTD return stands at 66.7%.