Firefinch (ASX:FFX) to raise AU$25M. Here’s why

Highlights

  • Firefinch Limited has announced its plan to offers its shareholders in Australia and New Zealand the opportunity to participate in a Share Purchase Plan.
  • The Company aims to raise around AU$25 million at an issue price of AU$0.58 per share.

ASX-listed Australia-based business, engaged in gold mining and lithium development Firefinch Limited (ASX:FFX) announced on Monday it intends to offer eligible shareholders in Australia and New Zealand the opportunity to participate in a Share Purchase Plan (SPP) of approximately AU$30,000 per shareholder. The announcement revealed that the Company aims to raise up to AU$25 million at an issue price of AU$0.58 per share.

According to the announcement, the SPP not only affords eligible Firefinch shareholders an opportunity to increase their investment in the Company, should they desire, but for those who remain shareholders at the relevant record date, will also ensure an entitlement to the planned in-specie distribution of Leo Lithium Limited (Leo) shares when Leo is demerged in early 2022.

As per the announcements dated 20 October, 2021 and 16 August, 2021 only eligible Firefinch shareholders will receive the planned in-specie distribution of Leo shares at no cost as part of the demerger.

The funds raised under SPP will be used for:

  • Ramp-up development activities at the Morila Gold Project, including further dewatering and tailings repatriation from the Morila Super Pit, pre-strip and mining the satellite pits at Viper and N’Tiola, and pre-stripping at Morila to allow commencement of open-pit mining.
  • Continuance of exploration, resource development and expansion drilling at the Morila Super Pit (including investigation of the underground potential).
  • Resumption of drilling at the Goulamina Lithium Project to convert Inferred resources to Indicated, and expand the resource base to provide for mine life extensions, and
  • General working capital to meet overheads across both the gold and lithium businesses, including supporting the planned demerger of Leo, and costs of the SPP.

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The record date for the SPP is 5:00pm (WST) on 22nd October 2021 and is open to all eligible shareholders in Australia and New Zealand. The Company intends to target raising up to AU$25 million (before costs) (43.1 million new shares) under the SPP.

Today, the shares of the Company declined by over 6% and the stock FFX closed at AU$0.610 per share on ASX.

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Bottom Line:

The funds raised under the Share Purchase Plan will be partly used by the Company to ramp-up activities at the satellites and the Morila Super Pit, and to Continue drilling activities at Morila to further enhance the Life of Mine Plan. In all, this SPP will increase cash availability with the company.

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