Castle Minerals (ASX:CDT) has executed an indicative non-binding term sheet with Ghana’s Mineral Income Investment Fund (MIIF) for a US$2 million ($3.03 million) investment to advance the Kambale Graphite Project in Ghana.
The proposed deal will fund Kambale through a Prefeasibility Study (PFS) that will evaluate the production of specialist natural graphite concentrates and value-added products used in the manufacture of lithium-ion battery anodes for EVs and energy storage.
Under the term sheet, MIIF will subscribe for US$500,000 worth of ordinary Castle shares at $0.0045 each — which will make MIIF the largest shareholder in the company.
Castle will also issue one new unlisted option for each two shares subscribed for to MIIF. Each option will be exercisable at $0.0075 between 12 and 24 months from the date of issue.
MIIF will also invest US$1.5 million for new shares in Castle’s subsidiary Kambale Graphite Limited (KGL) for a contributing equity interest, subject to independent valuation and negotiation.
As a result, MIIF will have the right to nominate a non-executive director to the KGL board, have a preferential right to commit additional funds during the pre-development and development stages to acquire up to 50% interest in the project, and purchase up to a maximum of 50% of the final graphite product processed in-country.
Executive Chairman Stephen Stone says this funding arrangement with Ghana’s sovereign wealth fund will not only see the project expedited through to a PFS, but also establishes a de-risking platform for the offtake of a major proportion of graphite production and the provision of development capital.
“With MIIF having already formed an alliance with Atlantic Lithium (ASX:A11) and it’s Ewoyaa Lithium Project, its Castle investment fully aligns with the country’s aspirations to build Sub-Sahara’s first lithium-ion battery manufacturing hub and to be a leader in the global energy transition,” Stone says.
“An undertaking to list on the fast-growing Ghana Stock Exchange will open up access to additional in-country investment and capital.
“Kambale’s fine flake graphite is the form required for lithium-ion battery anode manufacture and extensive testwork has demonstrated that it can be processed to achieve the stringent specifications required for use in anode manufacture.”
Stone notes that the 22.4-million-tonne resource will support a long-term production facility.
Both parties have agreed to pursue a listing of the company or KGL on the Ghana Stock Exchange within two years of commercial operations of the Kambale Project.
MIIF Chief Executive Edward Nana Yaw Koranteng says the investment supports the growth of mining in Ghana, as well as provides a de-risking option for investors in the industry.
“Combined with our investment in Atlantic Lithium, Ghana is moving closer to firmly positioning itself in the global EV supply chain and playing its part in reducing harmful global emissions,” he says.
Concurrently, Castle is conducting a placement to raise $1.25 million to fund gold-focused drilling at the Kapli Project and within the broader Wa Gold Project in Ghana.
Under the two-tranche placement, 500 million shares will be issued at $0.0025 per share. Participants will also receive one unlisted option for every two shares subscribed for, exercisable at $0.005 within two years.
The funds will primarily go towards continuing reverse circulation drilling at Kapli and several other prospects within the Wa Project.
The Kambale Project covers 149km2 and is located 6km west of Ghana’s Upper West regional capital of Wa, which is 640km north of Accra and the Port of Tema.
Castle Minerals is a diversified mineral explorer that owns assets in Ghana and Western Australia that are considered prospective for graphite, lithium, zinc, lead, copper, and gold.
Write to Aaliyah Rogan at Mining.com.au
Images: Castle Minerals
