Jindalee Lithium Ltd (ASX:JLL, OTCQX:JNDAF) is hoping to add A$6.7 million to its coffers through a targeted combination of a placement, an entitlement Issue and convertible notes, with the potential to raise up to a further A$9 million with the latter.
What’s it all for?
Proceeds from this capital raising will be channelled into completing the McDermitt Lithium Project’s pre-feasibility study (PFS), which will include new value optimisation opportunities to improve capital intensity, operating costs and production outcomes compared to the initial scope of the PFS.
The company will also continue its US activities, including baseline studies, permitting and stakeholder engagement. Residual funds will go to corporate costs, general working capital and costs associated with the capital raise.
Jindalee will continue to progress McDermitt throughout 2024 on the following fronts:
- tribal agreements (Q3);
- US Government technical cooperation agreement (Q3);
- production of battery-grade lithium carbonate from test work (Q3);
- update on POSCO test work currently underway in Korea (Q3);
- completion of optimised McDermitt PFS (Q4);
- potential award decision for non-dilutive US Government grant funding (Q3/Q4); and
- commencement of strategic partnership/investment process (Q4).
Commitments received
The company has garnered total firm commitments of A$4.1 million for the placement, including locked-in gross proceeds of around A$600,000 from institutional investors, directors and management, at an issue price of A$0.30 per share.
This includes a A$500,000 commitment from Mercer Street Global Opportunity Fund II, LP and other funds managed by US-based C/M Capital Partners, LP.
There’s also the opportunity for eligible shareholders to participate via a non-renounceable entitlement issue on a one-for-six basis to raise up to around A$3.1 million on the same terms as the placement.
Directors and management have also registered support for the entitlement issue, with pre-commitments received for around A$500,000.
Every two shares under the placement and entitlement issue will be accompanied by two free-attaching options, with placement options subject to shareholder approval.
Lastly, there’s a funding facility of up to $12 million via convertible securities received from Mercer Street with an initial tranche of $3 million and additional potential funding of up to $9 million by mutual agreement.
"Key value catalysts"
Jindalee CEO Ian Rodger said: “We are very pleased to have secured the support of Mercer Street as a long-term funding partner, alongside the continued backing of our existing shareholders.
“We firmly believe that the funding initiatives announced today will support Jindalee’s work programs for the foreseeable future. This funding will enable us to deliver several key value catalysts in the second half of 2024, including the optimised McDermitt PFS and a potential award decision for US Government grant funding.
“Additionally, we are excited by the value optimisation opportunities at McDermitt, which are underpinned by our recent metallurgical test-work which yielded better-than-expected results.
“Our goal is to reduce capital intensity and operating costs, thereby improving early returns while still delivering a multi-decade production outlook for battery-grade carbonate, from what we believe is an emerging top-tier, generational asset.”
"Value disconnect"
Mercer Street managing partner Jonathan Juchno added: “We see a significant value disconnect between Jindalee's current market valuation and the strategic potential of the McDermitt Lithium Project.
“With strong long-term prospects for the lithium market as the US builds out its battery value chain, we are confident in the Jindalee team's ability to advance the project through key milestones expected in the coming months."