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Highlights
- Lithium Universe raises $1.94 million with share placement’s first tranche.
- Funds directed towards feasibility studies and land options for Bécancour Refinery.
- Additional share placements pending shareholder approval for further development.
Lithium Universe Ltd (ASX:LU7) has completed the first round of funding for its ambitious Bécancour Lithium Refinery project. Through the initial tranche of a share placement plan, LU7 successfully raised approximately $1.94 million by issuing nearly 162 million shares at A$0.012 each. This influx of capital is dedicated to advancing the definitive feasibility studies (DFS) for the proposed refinery, alongside covering land option costs to secure the necessary sites for the facility.
The terms of the share placement offer a structured incentive, granting subscribers one new option per share purchased. Each option comes with an expiry date set for January 12, 2026, and an exercise price of $0.03, adding potential value for participants as the project progresses. This incentive structure aligns with LU7's goal of building a steady support base as it moves forward with the Bécancour project.
In addition to this initial tranche, LU7 has plans to extend the offering with a second round of share placements, targeting sophisticated and professional investors. This second tranche, however, is contingent upon shareholder approval, which will be sought at the company’s upcoming general meeting scheduled for December 9, 2024. If approved, LU7 will offer approximately 16.6 million additional shares, along with a pro-rata one-for-10 non-renounceable entitlement. Similar to the first tranche, the second tranche includes options with terms designed to support long-term investor engagement.
The entitlement offer for the second tranche is set to open on November 11, 2024, allowing eligible shareholders another opportunity to participate in the funding of LU7's critical North American lithium initiative. Through this project, LU7 aims to address the ‘Lithium Conversion Gap’ across North America by implementing a comprehensive strategy for producing battery-grade lithium carbonate from spodumene sources in Québec, Canada.
A key aspect of LU7's approach involves "take or pay" agreements with original equipment manufacturers (OEMs). These contracts secure LU7 a steady flow of spodumene supply and incorporate pricing mechanisms, such as floor and ceiling prices, to ensure margin stability amid fluctuating lithium prices. This model not only supports reliable returns for the company but also delivers a sustainable lithium supply for the OEMs, reinforcing LU7's position in the rapidly evolving lithium market.
Lithium Universe’s commitment to mitigating market volatility and securing supply continuity reflects a strategic approach to the lithium refining sector, aimed at fostering growth in North America's battery and EV industries.
