Group 6 Metals receives ‘strong support’ in targeted placement to raise $20 million

Group 6 Metals (ASX: G6M) has received strong support of its fundraising, securing binding commitments from new and existing investors in excess of its targeted placement to raise $20 million (before costs).

The capital raise is to primarily fund ongoing construction and operating activities at the Dolphin Tungsten Mine on King Island, Tasmania.

Group 6 Metals reports the placement has been strongly supported by existing shareholders, including those among the company’s top investors with $8 million in funds raised from the company’s top 4 shareholders.

Following the placement, the company will offer existing eligible shareholders the opportunity to participate in a non-underwritten Share Purchase Plan (SPP) capped at $3 million, on the same terms as the placement.

Funds raised under the placement and SPP will be applied towards capital expenditure ($7 million) and pre-production costs ($6 million) at Dolphin, and for general working capital ($7-10 million).

The company says it remains on track to achieve first tungsten concentrate production at Dolphin in Q1 2023.

The $20 million equity raising will result in the issue of more than 117.647 million new shares at an offer price of $0.17 per share – a 10.5% discount to the last traded price of $0.19 per share. About 87.765 million new shares will be issued and the remainder of the new shares will be issued to Managing Director and CEO Keith McKnight, Chairman Johann Jacobs, and Executive Director Chris Ellis, who intend to subscribe for new shares issued under the placement, which will be subject to shareholder approval at an Extraordinary General Meeting (EGM).

PAC Partners Securities, Jett Capital Advisors LLC, and Canaccord Genuity (Australia) acted as joint lead managers to the placement.

Group 6 Metals Managing Director and Chief Executive Officer, Keith McKnight said: “We are delighted to have secured the support of the new and existing investors who have participated in this $20 million equity raise as we move closer to a major milestone in the company’s history.

 “The commitments from investors are a strong endorsement of the progress G6M has made to date at the Dolphin Tungsten Mine which will enter the final stages of construction in the coming months”

The commitments from investors are a strong endorsement of the progress G6M has made to date at the Dolphin Tungsten Mine which will enter the final stages of construction in the coming months.

As we near the commencement of production at Dolphin, this equity raising provides funding certainty for the Company at a critical time in our development. Despite several industry-wide challenges faced by construction projects, such as escalations in capital and operating costs, our team has worked tirelessly to ensure the Project remains on schedule to reach this milestone in Q1 2023.

As recently announced, we have updated our project financial metrics in this environment, significantly increasing the Net Present Value from $241 million to $300 million pre-tax.

The market fundamentals for tungsten continue to be very positive for G6M and we look set to become a significant supplier of tungsten at a very favourable time. With Dolphin on track to come online in 2023, a shortage of tungsten concentrate has been forecast due to increasing demand and limited new supply set to become available in the marketplace.”

The company received pre-commitments of $8.0 million from existing investors including $2.5 million which will be subject to Foreign Investment Review Board (FIRB) approval.

Each investor in the placement and SPP will also be allocated an attaching option on a 1-for-2 basis, at a strike price of $0.28 per share with a two-year term (“Options”). This price represents a 65% premium to the placement price of $0.17 per share. The company will seek shareholder approval for the options being issued at the EGM.

Write to Adam Orlando at Mining.com.au

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Written By Adam Orlando
Mining.com.au Editor-in-Chief Adam Orlando has more than 20 years’ experience in the media having held senior roles at various publications, including as Asia-Pacific Sector Head (Mining) at global newswire Acuris (formerly Mergermarket). Orlando has worked in newsrooms around the world including Hong Kong, Singapore, London, and Sydney.