Walkabout Resources Ltd (ASX:WKT) (FRA:N6D) has finalised the third of its three-stage companion equity fundraising process with Battery Metals Capital Group LLC (BMCG) for the Lindi Jumbo Graphite Project in Tanzania.
The total US$12 million companion equity required to access the US$20 million project loan funding from CRDB Bank in Tanzania has now been secured and construction of the Lindi Jumbo Graphite Project is fully funded to production.
The emerging graphite producer has agreed to a placement of ordinary shares of up to US$10 million with the US-based institutional investor, which provides risk cover for the start-up of its Lindi Jumbo Mine.
“Exciting time” for company
Walkabout Resources chief executive officer Andrew Cunningham said: “The confidence demonstrated by BMCG in the Lindi Jumbo Graphite Project and in management reflects the underlying quality of the project.
“This final tranche in the funding requirements for Lindi Jumbo marks an inflection point in the company’s progress and puts us in an enviable situation, where international market timing is also working in our favour.
“We have already made the first stage US$4 million payment into Tanzania and commenced with the execution of the material agreements.
“Sufficient subscriptions have been received under the current Entitlement Offer for the Stage 2 US$4 million payment to be made to Tanzania next month.
“This is a very exciting time for Walkabout Resources.”
Placement in three tranches
This placement will be made in three tranches, each by way of the Investor making a lump sum cash prepayment of the subscription price of shares (subscription shares).
The first tranche will raise US$1.7 million, using the company’s current capacity under Listing Rule 7.1, and is expected to occur next week.
A second tranche will raise a further US$4.3 million following, and subject to, approval at a meeting of shareholders to be held in the next month or so.
Finally, an optional third tranche may raise US$4 million no later than 10 months following the second tranche, subject to the company exercising its option to receive this third tranche and shareholder approval, if required.
The placement agreement closes out an aggregate requirement of the US$12 million in equity required to be received, to unlock a further US$20 million in debt funding from Tanzanian Bank, CRDB.
Pricing of shares
BCMG will request for the subscription shares to be issued, in whole or in part, no later than 24 months after each subscription payment having been made by BCMG.
The number of shares issued will be determined by applying the purchase price to the subscription amount, but subject to a floor price of $0.12.
Subject to the floor price, after two months following the first tranche, the purchase price will be the average of the five daily volume-weighted average prices (VWAP) selected by BMCG during the 20 consecutive trading days immediately prior to the date of the investor’s notice to issue shares, less a 5% discount (or an 8% discount if the subscription shares are issued after 12 months)
It will be rounded down to the next half of a cent, or if the share price exceeds 50 cents, the next whole cent.
The purchase price will be the subject of the floor price of $0.12.
If the purchase price formula results in a price that is less than the floor price, the company may forego issuing shares and instead opt to repay the applicable subscription amount in cash (with a 5% premium), subject to BMCG’s right to receive subscription shares at the floor price in lieu of such cash repayment.
The company will have the right (but no obligation) to forego issuing shares in relation to BMCG’s request for issuance and instead to repay the subscription amount by making a payment to the investor equal to the number of shares that would have otherwise been issued, multiplied the purchase price or, if greater, the market value of the subscription shares at that time.
BMCG will not be obligated to provide the second or third tranche, and/or may reduce the size of the second or third tranche if the market price of the shares is below $0.135 and does not recover to above that level within two months after BMCG notifies the company.
Both Walkabout Resources and BMCG have the right to postpone the third tranche by up to two months.
Walkabout Resources will make an initial issuance of 3.8 million shares to BMCG at the time of the funding of the first tranche, towards the ultimate number of subscription shares to be issued.
Alternatively, in lieu of applying these shares towards the aggregate number of the subscription shares to be issued, BMCG may make a further payment equal to the value of these shares determined using the subscription price at the time of the payment.
The proceeds from the second and third tranches will not exceed 4% and 6%, respectively, of the company’s market capitalisation, without BMCG’s consent.