Atlantic Lithium Ltd (AIM:ALL, ASX:A11, OTCID:ALLIF), the company aiming to build Ghana’s first lithium mine, has boosted its finances, announcing it has secured fresh backing from Long State Investments.
The London-listed explorer this morning confirmed it has banked £1 million from a previously agreed share sale and is now launching a second fundraising round worth a further £2 million.
The latest investment round comes after a strong rise in the share price, with the stock up 29% in the last month and 71% in the last six.
The new cash is coming from Long State through what’s known as a “share placement agreement”, essentially, a way for companies to raise money by selling freshly issued shares to investment partners.
In a nutshell, Atlantic’s deal with Long State lets the company sell shares in several batches, bringing in up to £8 million over time.
The first £2 million batch is now completed. The recent strong performance in Atlantic’s shares meant the company could end the pricing period, the window for fixing the share price, early and at a better price than initially expected, a bonus for existing investors because it limits the dilution effect of selling new shares.
The next chunk, the “Second Placement”, will see Long State take another 19.4 million shares at about 10.3p apiece, with half the money arriving up front and the rest later. This staged payment approach helps manage cash flow.
Meanwhile, shareholders have just approved a separate arrangement that gives Long State more skin in the game.
Atlantic has issued 10 million warrants, which are rights to buy shares at a fixed price in the future, in this case at 12.8p, and another 10 million “security shares” handed over at no cost for the time being.
These security shares act as a kind of collateral while this wider funding facility remains in place.
Put together, these steps ensure Atlantic Lithium has the cash it needs as it pursues its goal of developing a key new source of lithium, a vital ingredient in electric car batteries, on the African continent.
The extra funding also means the company can move ahead without resorting to more expensive or riskier types of finance.