Walkabout Resources Ltd (ASX:WKT) is making great strides to secure the financing required to fully fund the Lindi Jumbo Graphite Project in Tanzania into development and production.
The latest step has seen the company close a 1 for 10 non-renounceable entitlement issue with Walkabout to reel in more than $7.6 million in funding, with new shares slated for issue on July 12 and quotation set to occur the following day.
During the raise, shareholders subscribed for just over 20 million of the 38 million shares on offer, raising slightly more than A$4 million.
Walkabout’s entitlement offer was underwritten, meaning a suite of shareholder underwriters, including the company chairperson, will pick up more than 18 million shortfall shares between them to raise the full A$7.6 million.
The cash injection will primarily cover US$4 million in stage two companion equity required to develop Walkabout’s Lindi Jumbo Graphite Mine in Tanzania.
Part of companion equity
Walkabout Resources CEO Andrew Cunningham said the bulk of these funds would be deployed as part of the companion equity for Lindi Jumbo development in the coming weeks and months.
He said: “Importantly, it also represents another third of the equity contribution required to meet the major condition precedent of the US$20 million in project debt from CRDB Bank.”
Fresh capital to support growth
The entitlement offer forms part of a broader plan to secure equity that will help the company fund the Lindi Jumbo Graphite Mine to production.
Back in April, the graphite explorer struck up a US$20 million debt funding facility with Tanzanian CRDB Bank PLC to cover 62.5% of the US$32 million in expenses associated with developing the Tanzanian graphite mine.
However, in order to access the funding parcel, Walkabout was required to secure US$12 million in companion equity, which it set out to raise over May and June.
First, Walkabout raised $6.4 million via a staged placement in May, offering institutional investors the chance to buy in at 20 cents per share.
Then, the company set out to secure up to $7.6 million via an entitlement issue, which closed on Monday and will raise the full amount with underwriter support.
Finally, in late June, Walkabout drummed up an institutional placement with US battery minerals investor Battery Metals Capital Group LLC (BMCG).
Under this offer, BMCG committed to provide up to US$6 million over two tranches and provide a further US$4 million within 10 months at the ASX-lister’s discretion.
All in all, these capital raising initiatives have provided sufficient funding for Walkabout to meet the US$12 million in companion equity requirements to access the CRDB Bank facility and fully fund Lindi Jumbo to production.
Lindi Jumbo project details
Walkabout's flagship Lindi Jumbo project is in south-eastern Tanzania, around 200 kilometres from the port of Mtwara.
The company holds 100% of a mining licence M579/2018, formerly part of prospecting licence PL9992/2014, which hosts the Lindi Jumbo graphite deposit and 70% of PL9993/2014.
These licences are within the highly prospective Mozambique belt, a region that hosts some of the world’s highest grade, coarse flake graphite deposits.
WKT has taken the project from discovery in October 2015 to the completion of a highly robust definitive feasibility study within 16 months and has been granted a mining lease over the deposit.
Lindi Jumbo has a JORC-compliant proven and probable ore reserve of 5.5 million tonnes at a grade of 17.9%, the highest ore reserve grade of any graphite development project in Africa, with the ore reserve based only on 37% of the measured and indicated portion of the mineral resource estimate.
A definitive feasibility study (DFS) was based on annual production of 40,000 tonnes of graphite concentrate with a high-grade feed to the plant at an average of 230,000 tonnes per annum over the mine’s 24-year lifespan.
Kimoingan Project
Walkabout is continuing to assess in-country growth potential in Tanzania and potentially extend its graphite footprint through reconnaissance and exploration campaigns.
At Kimoingan in the country's north, the company has hit high grades of up to 27% total graphitic carbon (TGC) following detailed mapping on PL1114/2017 while multiple parallel mineralised graphitic units of up to 12 kilometres in length have been mapped out with further extensions possible undercover.
The Kimoingan Project is near the Merelani graphite deposits that are being exploited on a small scale by private companies.
Detailed mapping and sampling within the licence area have delineated multiple graphitic zones up to 2 kilometres in length with most of the tenement covered by soils and or calcrete and with grab sample results up to 27.0% TGC.
The exploration potential range for the licence area is estimated to be between 22 and 72 million tonnes of in situ graphite bearing material at 10-15% TGC.
Walkabout has also generated new and more refined exploration targets at the flagship Lindi Jumbo Project, where further interpretation and reprocessing of historical VTEM data and exploration campaigns at the Gilbert Arc deposit area has extended the exploration potential range (EPR).
The EPR over its two flagship graphite tenements in Tanzania is now between 72 and 172 million tonnes at a grade ranging from 8% to 15% TGC.
Eureka Lithium Project
Walkabout also holds 100% of the prospecting rights over 2,000 square kilometres in what is potentially one of Namibia’s most prospective regions for lithium-bearing pegmatites.
The project comprises two exploration prospecting licences, EPL’s 6308 and 6309 in the extreme south of Namibia, around 25 kilometres north of the Orange River and the border of South Africa.
Member of European Raw Material Alliance
In May, the company joined the European Raw Materials Alliance (ERMA), a membership that aligns with WKT’s commitment to improve the resilience of critical supply chains and energy security.
With graphite included on the 2020 European Commission’s list of 30 critical raw materials, and Lindi Jumbo set to be the second-highest margin graphite project in the world, the relationship enables Walkabout to collaborate with European Union end users, financiers and stakeholders of lithium-ion battery technologies.
Speaking to the alliance, Cunningham said: “With prestart construction activity underway at our Lindi Jumbo Graphite Mine, and with natural graphite named one of 30 critical raw materials on the European Commission’s list in 2020, the company is delighted to be accepted into the European Raw Materials Alliance.
“The alliance is the ideal platform to collaborate with industry specialists in Europe and to support efforts to secure future supply of an alternative new source of graphite through strategic partnerships while making a lasting and meaningful economic contribution to the region of origin.”