Mali Lithium Ltd (ASX:MLL) (FRA:N9F) is moving closer to becoming a gold producer through a placement and share purchase plan (SPP) to raise up to $70 million for the acquisition of 80% of the operating Morila Gold Mine in southwest Mali.
The explorer has obtained binding commitments from institutional and sophisticated investors for a capital raising of $64 million via a two-tranche placement at an issue price of 16 cents per share.
It is also offering existing eligible shareholders an opportunity to participate in the fund-raising under a $6 million share purchase plan (SPP).
Resolute has successfully operated the nearby Syama gold mine in Mali for more than a decade.
Mali Lithium executive chairman Dr Alistair Cowden said: “We are delighted with the support from institutional and sophisticated investors and in turn the strong endorsement of the Morila Gold Mine acquisition.
“We are particularly pleased to welcome Resolute Mining Limited as a shareholder.
“The opportunity to develop a strategic partnership with Resolute in Mali will be investigated in the coming months.
“The acquisition of Morila represents a watershed moment for the company. In becoming a gold producer with a significant mineral resource base, we intend to build shareholder value through near term production growth and increasing mine life.
This fund-raising is an important step in the process as it enables the completion of the acquisition of Morila.”
The placement will be offered in two tranches to investors qualifying under Section 708 of the Corporations Act.
MLL is using its existing 15% capacity under ASX Listing Rule 7.1 for Tranche 1, involving around 47.6 million ordinary shares at an offer price of 16 cents per share.
This is a 17.9% discount to the last traded price on September 2 and an 11.9% discount to the 5-day volume-weighted average price.
The first tranche, which has been completed and raised $7.6 million, is expected to be settled by September 11, 2020.
Tranche 2 of around 352.4 million ordinary shares at 16 cents per share, is subject to shareholder approval at a shareholder meeting expected to be held in late October 2020.
The company has received commitments for $56.4 million for the second tranche.
Subject to shareholder approval, the company’s directors will participate in Tranche 2 and a number of directors and executives will also convert $400,000 of deferred fees to shares.
Euroz Securities Limited is acting as sole lead manager to the placement.
Share purchase plan
Under the SPP, shares will be offered at 16 cents per share and will be limited to up to $30,000 per eligible shareholder.
Mali Lithium reserves the right to accept oversubscriptions or to scale back applications in its absolute discretion.
The SPP offer period is anticipated to be open from September 21, 2020, to October 21, 2020.
Conversion of accounts payable to equity
Mali Lithium has also agreed with Capital Drilling to convert to equity up to $1.25 million owed by the company, pursuant to drilling services provided.
It will issue 1,562,500 ordinary shares at 16 cents per share to Capital Drilling at the same time as Tranche 1 of the placement, and a further 6,251,095 ordinary shares, also at 16 cents per share, subject to shareholder approval.
Capital Drilling has also been given preferred contractor status for drilling to be undertaken by the company to September 3, 2023.
Use of funds
Funds raised will go towards the acquisition of Morila Gold Mine, amounting to US$22-27 million, subject to adjustments at closing.
Funds raised in excess of the Morila acquisition will be applied to the following growth activities:
➢ Completion of a new mine plan (resources, ore reserves, schedules and costs);
➢ Drilling to infill and extend resources;
➢ The re-start of open pit mining, initially at the N’Tiola and Domba satellite pits;
➢ Plant and infrastructure works, principally tailings dam and power station;
➢ Preparation for a re-start of mining at the Morila pit (dewatering and earthworks);
➢ Preparation of a mining permit for the company’s Koting discovery; and
➢ General working capital.
Following the Morila Gold acquisition, cash flow from the existing tailings operation and satellite pit mining will be used to fund its growth activities.
The company will look to fund any additional working capital requirements through debt or similar facilities to deliver shareholders an optimal capital structure.
The Morila mine has produced more than 7.4 million ounces of gold over 20 years from a 4.5 million tonnes per annum plant and will instantly transform Mali into a cash-generating gold producer.
Morila is producing gold from hydraulic mining and processing of tailings and will provide cashflow for Mali Lithium from completion of the acquisition.