Graphite developer International Graphite (ASX:IG6) is chipping in to support a $1.5 million secured convertible loan for Comet Resources (ASX:CRL).
The loan is part of Comet’s plan to get its shares reinstated for trading on the Australian Securities Exchange (ASX).
Comet holds 40 million IG6 shares, which represents about 24% of International Graphite’s issued capital. These shares are subject to escrow on the ASX until 7 April 2024.
As a result, International Graphite, which has a $36.55 million market capitalisation, is a party to the secured convertible loan and has contributed $250,000. The company has also agreed to act as a security trustee on behalf of the investors who are also party to the loan.
The $1.5 million loan matures in 12 months, accrues interest at 8% per annum in cash, and has a mandatory conversion into new Comet shares if Comet’s shares are requoted on the ASX at the lower of $0.09 per share or a 10% discount to the next capital raise.
Once the loan is converted and Comet shareholder approval is received, a 1 for 2 option to acquire shares will be issued by Comet at an exercise price of $0.2 expiring in 3 years.
Commenting on the convertible loan, International Graphite Chairman Philip Hearse says: “It is in the best interests of International Graphite that Comet be strong and successful. Comet’s holding in International Graphite is an important strategic investment. We are pleased to support Comet’s plans.”
“It is in the best interests of International Graphite that Comet be strong and successful”
Yesterday (26 July 2023), Comet submitted an application to the ASX which set out its recapitalisation strategy. This funding will be used to progress exploration at the Barraba Copper Project in New South Wales and its base and metals projects in the Northern Territory, as well as for general working capital purposes.
In addition to International Graphite’s investment, Comet plans to launch an entitlement offer in collaboration with CPS Capital Group. As Comet requires more than $1.5 million in funds to meet the financial requirements for reinstatement, this entitlement issue will allow shareholders to participate once Comet knows the conditions for reinstatement.
Comet says further to its support of the loan, International Graphite may provide underwriting for a portion of a planned entitlement issue.
Comet also says there is no guarantee the ASX will approve the reinstatement.
Comet Resources is a base, precious, and industrial metals explorer that holds the Barraba Copper Project in New South Wales, along with the Oonagalabi, Paradise Well, and Silver Valley projects in the Northern Territory.
International Graphite is an Australian graphite developer focused on its Springdale Graphite Project and Collie Process Facility in Western Australia.
As of 30 June 2023, International Graphite had $2.7 million cash at hand and $900,000 in advance research and development funding, according to its latest quarterly report published on 24 July 2023.
Write to Harry Mulholland at Mining.com.au
Images: International Graphite Ltd