Southern Gold Ltd (ASX:SAU) will progressively sell its remaining shareholding in London-listed Bluebird Merchant Ventures Ltd (BMV) which is expected to bring in approximately A$1 million by December 31, 2023.
A binding agreement with UK-based Catalyse Capital Ltd will see Southern Gold sell its remaining 122.5 million BMV shares in five separate transactions. This shareholding represents 17.8% of BMV’s issued capital.
Five tranches
The first will see 22.5 million shares sold at 0.55 pence per share with settlement to occur on August 28, 2023.
SAU will see the remaining 100 million in four tranches of 25 million each to be settled monthly from September to December 2023.
Each of these four tranches will be priced at 75% of each month’s VWAP for BMV shares traded on the LSE, with a floor price of 0.4 pence. The VWAP will exclude any transactions made as part of the agreement.
This agreement will raise total cash proceeds of a minimum £520,000 (~A$1.04 million) if each of the four tranches were traded at the floor price of 0.4 pence.
The last LSE traded price of BMV shares on August 21, 2023, was 0.63 pence and using this as an indicative monthly VWAP, the four tranches would be traded at 0.473 pence for total proceeds of £600,000 (~ A$1.19 million). This is indicative only and the actual VWAP for each month will differ.
Will remove ‘overhang’
Southern Gold said that this agreement with Catalyse Capital, an existing large shareholder in BMV, would remove a significant ‘overhang’ in the trading of BMV shares on the LSE.
The variable VWAP pricing for 100 million of the shares allowed the company to benefit from any potential increase in the BMV share price that may occur from the removal of this ‘overhang’, SAU said.
Southern Gold has already sold 26.25 million BMV shares on the LSE during the last two months, raising £160,000 (~A$320,000).
To extend cash runway
Proceeds from the sale of BMV shares will further extend the company’s cash runway to progress the commercialisation of its next-generation battery technologies, critical minerals exploration in South Korea and general working capital requirements.
These proceeds will add to the company’s cash position which stood at A$4.2 million at June 30, 2023, and SAU also expects to lodge a Research & Development Tax Incentive claim of about A$300,000 before the end of September 2023.
“The SAU board and management wishes BMV well with its plans to advance projects in South Korea and the Philippines,” the company added.