Nzuri Copper Ltd (ASX:NZC) has secured a cornerstone $10 million strategic investment by Huayou Cobalt through Huayou HK to advance its portfolio of copper-cobalt projects in the Democratic Republic of Congo (DRC).
This would include expansion and optimisation studies on the company’s flagship Kalongwe copper-cobalt project.
Huayou Cobalt has established copper and cobalt operations within the DRC and is listed on the Chinese stock exchange with a market capitalisation of circa US$8 billion.
Investment encompasses placement and convertible loan
The investment is at a price of $0.2507 per share, a discount to Nzuri’s closing price on the previous day of $0.36.
The placement will raise circa $6.6 million through the issue of 26.5 million shares.
The remaining funds will be in the form of a convertible loan which will be transferred into shares upon the receipt of prior shareholder approval.
Funding arrangement to be completed by January
The placement is due to be completed on or before December 20, while the company is due to receive loan funding through the convertible note on or before January 10, 2018.
The likelihood of approval appears sound given that Nzuri’s largest shareholder (57.4%), Tembo Capital has provided the company with a written statement confirming its intention to vote in favour of the placement and the issue of the convertible note.
Funds to be used for test work, scoping study and early-stage development
The capital raised will be used to investigate the prospect of using a solvent extraction-electrowinning process (SXEW) which has the potential to produce pure copper onto cathodes.
This would be a distinct advantage if the company could establish such a facility as it could provide the opportunity to produce high purity cathode on site.
There are also expected to be funds available to assist in early-stage development activities at the Kalongwe copper-cobalt project.
While some funds will be set aside for working capital, there is also scope to partly finance exploration activity.