Salt Lake Potash Ltd (ASX:SO4) (LON:SO4) (FRA:W1D) has received binding commitments for a successful share placement to institutional shareholders and investors for up to 130 million new ordinary shares at 40 cents each to raise up to A$52 million.
This equity raising enables the first drawdown of US$105 million under the Taurus Mining Finance Fund No2 LP and the Clean Energy Finance Corporation (CEFC) US$138 million Syndicated Facility Agreement.
The company also plans to undertake a non-underwritten share purchase plan (SPP) to raise up to a further A$5 million.
“Well financed to deliver Lake Way Project”
SO4 chief executive officer Tony Swiericzuk said: “SO4 is pleased to have completed this placement of up to A$52 million to enable financial close on the US$138 million Taurus/CEFC debt facility.
“In combination, these funds will ensure the company is well-financed to deliver the Lake Way Project.
“I would like to extend my sincere thanks to our shareholders for their continued support of the project, our company and the development of a new export industry for Australia.”
The company is raising up to A$57 million in equity financing including a placement of up to A$52 million and an SPP to be offered to eligible shareholders for up to A$5 million in order to satisfy the remaining conditions precedent and achieve financial close on the SFA, and to be used as follows:
- A$15 million to cover variations to ramp-up vs bank model;
- A$18 million to cash back bank guarantee for APA gas pipeline;
- A$10 million due to recent AUD strength (spot 0.743 vs. 0.68 in the BFS);
- A$2 million financing transaction fees; and
- Up to a further A$12 million for additional working capital.
In addition, SO4 directors intend to subscribe for up to 5 million placement shares, including 3 million shares by chairman Ian Middlemas and 500,000 shares by managing director and CEO Tony Swiericzuk, subject to shareholder approval.
Syndicated facility agreement key terms.
Debt financial close and first draw
The lending group has now confirmed to the company that all conditions precedent to the first drawdown have been satisfied or waived, save for:
- Completion of equity raise of at least A$30 million (net) – expected to be satisfied by Tranche 1 of the placement;
- US$8 million moved into Debt Service Reserve Account – to be completed following the completion of Tranche 1 of the placement;
- The payment of transaction fees; and
- Repayment of the US$45 million bridge – to be funded from the first drawdown under the SFA.
The balance of the debt is expected to be drawn down in quarter two of 2021 subject to market standard conditions.
Share purchase plan
The company plans to undertake a non-underwritten SPP to raise up to a further A$5 million at an issue price of 40 cents per new share.
This SPP will enable existing eligible shareholders, irrespective of the size of their holding, to participate in the capital raising at the same issue price as the placement, and not incur any brokerage or transaction costs.
Eligible shareholders as at 1.00pm (AEDT) on December 10, 2020, will have the opportunity to apply for up to A$30,000 worth of new shares in the company.
The placement is comprised of two tranches:
- Tranche 1, comprising the issue of 66,593,631 placement shares which are expected to be issued on or around December 18, 2020; and
- Tranche 2, comprising the issue of 5,025,000 placement shares to directors, subject to the receipt of prior approval of the company's shareholders.
A general meeting to seek the requisite approval will be convened shortly, with the meeting expected to be held in late January 2021.
Lake Way construction on schedule and budget
Lake Way Project remains on schedule for first SOP production in March 2021 and first SOP sales in April 2021.
The project capital budget remains unchanged at A$264 million and the overall project was 77% complete on a value earned basis as at November 30, 2020.
Key project workstreams continue to progress with engineering now 99% complete, plant and non-process infrastructure contract awards 99% committed, structural steel 65% complete and the APA gas pipeline now 25% complete.
In November 2020 the company started harvesting first plant feed salts from the Train 1 pond network in preparation for plant commissioning, which is expected to commence in February 2021.