Northern Minerals Ltd (ASX:NTU) has entered into subscription agreements with various sophisticated investors to raise $22 million under a private placement of 1.1 billion shares.
There will be 375 million of these shares issued to repay all amounts owing in respect of and redemption of the convertible notes issued on June 26, 2019, with an aggregate face value of A$7.5 million.
Remaining proceeds will be used for continuing development of the company’s projects and operation of its business; for expenditure relating to care and maintenance of the Browns Range Pilot Plant; and for general working capital purposes.
The placement comprises four tranches:
The issue of 259,525,770 subscription shares under Tranche 1 will be made using the company’s existing placement capacity under Listing Rule 7.1A.
The remaining Tranche 1 shares will be made from the company’s placement capacity under Listing Rule 7.1.
Issuing of subscription shares under Tranches 2, 3 and 4 is subject to the approval of company shareholders and a notice of meeting will be sent shortly.
All subscription shares issued under the placement will be fully paid ordinary shares and will rank equally with the company’s existing quoted shares on issue.
Share purchase plan
Northern Minerals is also offering eligible existing shareholders on the share register at 5pm (Perth time) on April 17 with registered addresses in Australia or New Zealand the opportunity to participate in a Share Purchase Plan (SPP).
The SPP is not underwritten and the company is targeting to raise approximately A$5 million, before costs.
Funds raised under the SPP will also be put towards the same purposes as the remaining placement funds.
Applications for new shares under the SPP will be capped at the statutory maximum allowed of A$30,000 per eligible shareholder, across all their holdings.
The offer price per new share under the SPP will be the same as the issue price for the subscription shares under the placement, being 2 cents per new share.
This represents a 17.4% discount to the volume-weighted average market price of the company’s shares calculated over the last five days on which sales in the shares were recorded before today’s date.
The SPP will provide eligible shareholders with the opportunity to increase their holding without paying brokerage or transaction costs.
Baogang placement prohibited
Northern Minerals has received from Baogang a copy of an order made by the Treasurer of the Commonwealth of Australia prohibiting the $20 million Baogang placement initially announced on August 15, 2019.
The company entered into a subscription agreement with Baogang Group Investment (Australia) Pty Ltd (BGIA) to raise $20 million before costs under a private placement.
BGIA is a wholly-owned subsidiary of a Chinese State-Owned Entity that owns steel mills in China.
The placement was for the issue of a total of 322,580,645 shares at an issue price of 6.2 cents per share.
Following the order made by the Treasurer of the Commonwealth of Australia, the issue of shares to Baogang will not proceed.