American Pacific Borates Limited (ASX:ABR) has completed a placement of $2.75 million at 25 cents per share to three global institutional investors.
Funds raised will help pay for long-lead items for the Fort Cady Borate Project in southern California such as centrifuges, the crystalliser, Manheim furnaces and the natural gas connection.
ABR remains on track to begin initial civil works at the project by the end of the year.
The placement was completed at a 4.4% discount to the company's 10-day VWAP of 26.1 cents.
It includes five unlisted options for every six ordinary shares with a strike price of 30 cents set to expire on December 6 2021, or 15 days after the company’s shares have traded over 50 cents for 10 consecutive days.
There will be 11 million ordinary shares and 9,166,668 options issued under the company’s existing ASX Listing Rule 7.1 capacity.
Furthermore, under the Amvest convertible note, the company must repay 23 equal monthly instalments with cash or the allotment of ordinary shares.
The board has determined it will repay these instalments via cash to limit further dilution in the short term.
The first cash repayment to Amvest was made on December 6, 2019, covering the second period to December 5, 2019.
Fort Cady details
Fort Cady is a highly rare and large colemanite deposit and is the largest known contained borate occurrence in the world not owned by the two major borate producers Rio Tinto and Eti Maden.
It contains measured, indicated and inferred resources of 13.93 million tonnes of contained boric acid.
A definitive feasibility study (DFS) completed in December 2018 delivered compelling financial metrics including a steady-state annual production target of 410,000 tonnes of boric acid and 110,000 tonnes of SOP, delivering an unlevered post-tax NPV10 of US$1.25 billion and an unlevered post-tax IRR of 41%.
In January 2019 the DFS was enhanced to include a low capex starter project with an estimated capex of only US$36.8 million.
This starter project delivers an EBITDA in the first year of operation of US$26.7 million and preserves the pathway to an EBITDA of over US$340 million in the first year of full production for the broader project.