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Cauldron Energy Ltd secures $2.5M at significant premium from Chinese investor

Tony Sage, executive chairman, commented: “This placement to a key Chinese investor at such a significant premium to the market validates our considerable success in developing the project.”
Cauldron Energy Ltd secures $2.5M at significant premium from Chinese investor

Cauldron Energy Ltd (ASX:CXU) has executed a A$2.5 million placement agreement with a new Chinese sophisticated investor.

Under the agreement, Cauldron will issue 31.25 million shares priced at $0.08, which represents a 29% premium to the company’s last closing price.

The agreement is conditional to the investor approving the company’s financial budget for the period to 31 December 2017.

Funds raised will primarily be used at the Bennet Well uranium deposit within the Yanrey Project in Western Australia to complete its passive seismic survey work, commence field leach trials and for working capital.

Tony Sage, executive chairman, commented: “This placement to a key Chinese investor at such a significant premium to the market validates our considerable success in developing the project.”


Placement agreement


The Chinese investor needs to approve the company’s financial budget for the period to 31 December 2017 as a condition precedent to the placement agreement.

Management is currently in the process of constructing its budget, which it anticipates will be presented for approval by the board and investor in the coming weeks.

In accordance with the placement agreement, the A$2.5 million will be paid to the company in two tranches, as follows:

- A$1 million by 30 September 2016; and
- A$1.5 million by 31 October 2016.

The placement agreement also includes the offer of 20 million unlisted options exercisable at $0.08 on or before 31 December 2018.

Shareholder approval will be sought at the company’s upcoming annual general meeting for the issue of the placement shares and options.

Cauldron has also agreed to appoint an additional director to the board upon completion of the placement.

Yanrey Project: Bennet Well

While the company continues to retain its interests in South Australia and Argentina, Cauldron’s main focus remains on the Bennet Well uranium deposit within the Yanrey Project in Western Australia.

The Bennet Well uranium deposit is comprised of three spatially separate deposits:

- Bennet Well East;
- Bennet Well Central; and
- Bennet Well South.

In December 2015, Cauldron achieved its objective of increasing the Mineral Resource estimate of the Bennet Well uranium deposit.

The upgraded Mineral Resource JORC 2012 estimate was reported as 38.9 million tonnes at 360 parts per million uranium for 30.9 million pounds of uranium oxide.


Analysis


The proposed placement at a 29% premium to the last traded share price is a positive endorsement for Cauldron and the Bennet Well uranium deposit.

Furthermore, it provides the company with valuable funding to continue exploration and development of Bennet Well.

The region has recently attracted interest and investment highlighted by the recent deal valued at up to US$30 million between MGT Resources Ltd (ASX:MGS) and Paladin Energy Ltd (ASX:PDN).

News regarding the approval of the budget is expected over the coming weeks which is integral to the placement agreement’s completion.

 

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