Today, on 14th May 2019, Northern Cobalt Limited (ASX: N27) announced its share placement and non-renounceable rights issue. The company will be raising $450,000 via share placement and a 1-for-3 non-renounceable rights issue at 5 cents per share to raise up to $1.04 million. The funds raised will be used to further progress the company’s Snettisham Project in Alaska and Wollogorang Project in the Northern Territory. Investors in the placement will be offered options exercisable for one fully paid share in the company at 10 cents each on or before 30th June 2022. Subscribers to the Rights Issue will also receive one free attaching option for every two shares subscribed for, exercisable at 10 cents on or before 30th June 2022. The company will seek quotation of the options. The issue price reflects an 18% discount to the most recent one-month volume weighted average of the company’s share price.
The Snettisham Project is in south-western Alaska, contains the potential for large scale mineralisation and is positioned with access to infrastructure requirements such as cheap electricity, transport options and proximity to the mining town of Juneau in Southern Alaska. The local geology is well suited to host Juneau Gold Belt style mineralisation, which occurs as lode gold within fault and shear structures in the host rocks.
N27 will be testing the Gregjo Prospect for copper and Running Creek Prospect for copper and cobalt in the NT. The Gregjo Prospect includes a large induced polarisation (IP) chargeability anomaly identified in multiple traverses. The anomaly is directly below copper mineralisation intersected in recent shallow drilling, extending up to 200 meters out from the Gregjo Fault and 800 meters along the fault. The Running Creek Prospect is adjacent to the company’s Stanton Cobalt Mineral Resource and has a similar IP anomaly extending up to 200 meters from mineralisation. Drilling results include 55m @ 0.78% Cu from 0 meter (hole 18RAB102) including 33 meter @ 1.08% Cu from 11 meter and 13 meter @ 2.01% Cu from 11 meter. Both prospects will be tested with follow up drilling campaigns following the capital raise.
The Junior Minerals Exploration Incentive (JMEI) scheme enables eligible exploration companies to generate refundable tax credits to distribute to shareholders by forgoing a portion of their carried forward tax losses that have arisen from allowable expenditure on “greenfield” exploration. The final amount of JMEI credits to be distributed will be impacted by the company’s spending on greenfield exploration, the tax losses incurred during 2018/19 and the number of new shares issued during 2018/19.
The JMEI credits can be issued by the company after reporting of its 30th June 2019 tax return and will apply to the 2018/19 tax year. Australian resident shareholders with JMEI credits will be entitled to refundable tax offsets or franking credits. The JMEI credit could have tax consequences on shareholders, and therefore, holders are required to obtain independent tax advice. Shares issued under the placement and rights issue will entitle eligible shareholders to receive JMEI credits on a pro-rata basis, and eligible shareholders will be notified by the company of their JMEI credit entitlement in the approved form by 30th September 2019.
On the stock information front, at the time of writing (on 14th May 2019, AEST 01:30 PM), the stock of Northern Cobalt was trading at $0.053, with a market capitalisation of ~$2.85 million. Its 52 weeks high price stands at $0.295, with an average volume of 97,553. Its absolute returns for the past one year, six months and three months are -80.37%, -51.82%, and -5.36%, respectively.
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