G6M tungsten project

Group 6 Metals’ top 4 shareholders commit to providing lion’s share of $30 million capital raise

Group 6 Metals (ASX:G6M) has received strong support for its capital raising, securing binding commitments from new and existing sophisticated, professional, and institutional investors to raise a minimum of $30 million.

The company has also received commitments for $3 million in underwriting for a Share Purchase Plan (SPP) providing the runway to progress operations towards positive cash flow.

Group 6 Metals reports the placement and SPP have been strongly supported by existing shareholders, with $21 million in funds raised from its top 4 shareholders alone.

Placement proceeds will primarily fund operating activities to progress operations towards positive cash flow at the Dolphin Tungsten Mine on King Island, Tasmania.

The placement will comprise cash consideration of $24 million and conversion of $3 million of unsecured debt provided by entities of the key shareholders Chris Ellis, Richard Chadwick, and Dale Elphinstone since 31 March 2023, resulting in aggregate issuance of 193.1 million new shares.

Following the placement, Group 6 Metals proposes to offer existing eligible shareholders the opportunity to participate in a partially underwritten SPP to raise up to $5 million on the same terms as the placement.

Three of the company’s top shareholders intend to collectively sub-underwrite $3 million of the funds to be raised under the SPP. The intended sub-underwriting by Chris Ellis (as Group 6 Metals director) will be subject to shareholder approval at a forthcoming EGM.

Group 6 Metals Managing Director and Chief Executive Officer Keith McKnight says funds being raised will strengthen the company’s balance sheet, supporting the Dolphin Tungsten Mine ahead of the first concentrate shipment planned for June 2023.

“Securing the backing of our existing and new investors, who have participated in this minimum $30 million equity raise, assists the company in fulfilling the commitment to recommence tungsten production at the Dolphin Tungsten Mine”

“Securing the backing of our existing and new investors, who have participated in this minimum $30 million equity raise, assists the company in fulfilling the commitment to recommence tungsten production at the Dolphin Tungsten Mine. We are grateful for the commitments from investors, which underscores the progress achieved at the project and its imminent restart of operations. We also appreciate the ongoing support of our major shareholders who subscribed for the majority of this raising.

As we move into the production phase at Dolphin, this equity raising provides a funding runway to progress operations through to positive cash flow at a critical time in our development. Despite several industry-wide challenges construction projects face, such as escalation in capital and operating costs, our team has worked diligently to minimise operating costs and safeguard against further equity requirements. While the project continues to have very attractive margins, the Company will continue to evaluate opportunities to optimise mine and process plant productivity further to increase output and lower unit costs.”

McKnight adds that the market fundamentals for tungsten continue to be very positive, and the company looks set to become a significant supplier of tungsten at a very favourable time. The company has secured nearly 60% of estimated production for the first 4 years through offtake agreements with Traxys and Wolfram (Sandvik) and have received additional solid demand for our product.

Tungsten

“Beyond the Dolphin Tungsten Mine, this financing provides G6M with the capacity to add value through the development of Bold Head mine operations, exploration at the Investigator prospect, renewable energy deployment and potential downstream processing to increase WO recovery.”

Funds raised will be applied towards progressing the commissioning and ramp-up of the mining and process plant operations, creditor payments, and to accelerate the feasibility studies for the Bold Head mine development, downstream processing and the integration of renewable energy to the current power supply for the mine. These funds will strengthen the company’s balance sheet and working capital position as it progresses the initial ramp-up phase of production ahead of anticipated steady-state production expected in Q3 CY23.

“It is a testament to our investors’ faith in the Mine and our commitment to resuming production at Dolphin soon”

Group 6 Metals Chairman Johann Jacobs says the capital raise and backing by shareholders is an endorsement of the quality of the company’s flagship asset.

“It is a testament to our investors’ faith in the Mine and our commitment to resuming production at Dolphin soon. I would also like to take the opportunity to welcome new holders to the G6M register. We eagerly anticipate updating the market through what promises to be an exciting production ramp-up period for the company.”

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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.