Lake Resources N.L. (ASX:LKE) has received commitments worth A$20.6 million (before cost) to issue about 125 million new shares at an issue price of A$0.165 per unit to institutional investors.
LKE to Issue 125 Million New Shares
At A$0.165, the issue price marks a 6 per cent discount to the 5-day Volume-Weighted Average Price (VWAP) and a 12 per cent premium against the 10-day VWAP.
The issue would also mark an embedded option for every two new shares with an exercise price of A$0.30 with a two-year expiry. The Company would issue ~62.5 million options along with new shares, subject to shareholders approval.
The settlement of the new issue is anticipated to be completed by 27 January 2021.
Net Proceeds to go for Kachi DFS
The ASX-listed clean lithium developer Lake Resources would use the net proceeds for the placement to North American, European, and Australian institutional investors for operating the lithium chloride direct extraction Pilot plant in California.
Kachi Project Economics (Image Source: Company’s Presentation Dated 19 January 2021)
- The Company plans to utilise the net proceeds from the placement to commission the Demonstration Plant on-site at Kachi to produce larger samples for off-taker while completing the prospect’s Definitive feasibility Study (DFS).
- Additionally, LKE would utilise the funds for completing an Environmental and Social Impact Study (ESIA) at the Kachi Project. Besides, the Company would keep some funds for exploration and evaluation studies across all projects along with working capital.
Words from the Management
Commenting on the placement of over A$20 million, CEO Stu Crow, expressed gratitude towards investors while calling it a transformative moment for the Company.
Mr Crow also stated that its sole agent – Roth Capital had introduced several new investors to the Company, which would allow LKE to broaden the exposure to the international financial markets.
Steve Promnitz (MD) mentioned that these raised funds would assist the Company in sailing the flagship Kachi project in Argentina by providing inputs into the DFS aimed at the rapid growth of the clean energy sector.
Also, Mr Promnitz cited that the current placement places the Company in a strong financial footing, allowing it to hold over A$25 million while adding another A$6 million in coffers by July as existing options convert.
Lake Resources previously moved towards shallow on-site drill testing work at the Kachi Lithium Brine Project after extending its existing Controlled Placement Agreement with Acuity Capital to 40,000,000 shares (LKE) in November 2020 with an increased expiry to 31 January 2023.
Kachi Resource Estimates (Image Source: Company’s Presentation Dated 19 January 2021)
The CPA extension further increased the funding for the project by A$5.5 million via issuing 40,000,000 shares at an issue price of A$0.0844.
The Company’s stock has witnessed a bull run recently with prices now climbing to a new three-year high of A$0.268 (as on 25 January 2021, 1:32 PM AEDT).
LKE has been on an uptrend from A$0.032 (intraday low on 26 August 2020) to the present high, marking over a seven-fold increase.