Westar Resources (ASX:WSR) has entered into an option agreement with privately held Astralis Resources to acquire the Uley North Graphite Project in South Australia.
The project comprises two exploration licences covering a 163km2 area and is considered highly prospective for graphite.
Westar says the the two tenements immediately border extensions of Quantum Graphite’s (ASX:QGL) Uley Graphite Mine which hosts Australia’s highest grade flake graphite resource of 7.2 million tonnes at 10.5% total graphitic carbon.
As part of the agreement, Westar, which has a market capitalisation of $2.78 million, will pay $75,000 cash to Astralis for a three-month sole option to purchase Uley North.
If Westar exercises the option, the company will issue 30 million fully paid ordinary shares and 80 million performance rights to Astralis, subject to shareholder approval.
During the option period, Westar plans to conduct due diligence and exploration. The option period may be extended by mutual agreement.
Executive Director Lindsay Franker says the company has begun a detailed review of existing datasets and is currently conducting ground truthing to gather an understanding of the project’s graphite potential.
“We are currently planning our exploration programs and are considering detailed airborne electromagnetic surveys that we expect will unlock the graphite mineralisation potential of the project,” Franker says.
Graphite has been added to the Australian critical minerals list for the energy transition, as it is considered a key component in lithium-ion batteries for electric vehicles and energy storage.
This has attracted significant government funding for various graphite players, including Renascor Resources (ASX:RNU), who has been approved for a $185 million loan to fast track construction of its Siviour Graphite Project in South Australia, 100km northeast of the ground Westar is looking to acquire.
Westar is also conducting a placement and entitlement offer to raise $2.9 million, consisting of a two-tranche placement and a one-for-two non-renounceable entitlement offer of new shares to eligible shareholders.
Under the placement and entitlement offer, 292.7 million new shares will be issued at $0.01 per new share, representing a 33.33% discount to Westar’s last closing price of $0.015 and a 22.93% discount to the 20-day volume weighted average price (VWA) of $0.0130.
CPS Capital Group acted as lead manager to the capital raising.
Subject to shareholder approval, Westar directors plan to participate in the offer in respect of the shares held, and will also contribute $150,000 to the placement.
The entitlement offer will open on 26 April 2024 and will close 5pm AWST on 10 May 2024.
Westar Resources is a Perth-based mineral explorer focused on the discovery and development of gold, lithium, and critical minerals.
Write to Aaliyah Rogan at Mining.com.au
Images: Westar Resources
