Poseidon Nickel Ltd (ASX:POS, OTC:PSDNF, FRA:NYG1) has received commitments to raise $22 million via a share placement to drive progress towards an operations restart at its cornerstone Black Swan Project in Western Australia.
The nickel sulphide exploration and development company set out to place 200 million fully-paid ordinary shares with new and existing institutional, professional and sophisticated investors at 11 cents each.
Poseidon is also offering retail investors the chance to increase their holding via a $3 million share purchase plan.
Primarily, the cash injection will support drilling programs at the Golden Swan and Silver Swan targets and fund mining and production studies the consider the potential recommencement of operations at Black Swan.
Placement drives progress at Black Swan
Poseidon Nickel managing director and CEO Peter Harold said: “This over-subscribed placement supports the company on our continued strategy to build high-grade nickel inventory at our Black Swan project and progress the project toward a potential recommencement of operations in 2022.
“The funds raised will be used to continue exploration activities at Golden Swan and across the Southern Terrace, undertake drilling to convert additional Silver Swan mineral resources to ore reserves and complete mining and production studies at Black Swan.
“Funds will also be allocated to reviewing the exploration potential of our Lake Johnston and Windarra nickel projects.
“The company would like to thank our existing and new shareholders who participated in the placement. We would also like to thank Morgans and MST Financial for their assistance.”
Raise details
Under its $22 million placement, Poseidon will issue 200 million shares at 11 cents a pop.
This price represents a 10% discount to the 10-day volume-weighted average price and an 18.5% discount to the last closing price of POS shares before the trading halt.
Shares issued under the placement will be issued under the company’s existing placement capacity, with quotation set to commence next Tuesday.
In addition, under a $3 million share purchase plan, retail holders have the chance to subscribe for as much as $30,000 worth of POS shares at the same price as the placement.
Further details will be announced to the exchange in due course.
Once the placement completes, Poseidon will have around $27 million in cash to work towards an operations restart at Black Swan and undertake exploration at its other projects.
Use of funds
Poseidon will distribute the fresh capital to:
- Undertake diamond drilling from surface and/or underground to further test the potential of Golden Swan’s Southern Terrace to host additional high-grade nickel mineralised zones;
- Drill the Silver Swan orebody to upgrade existing mineral resources to ore reserves, increasing the existing reserve base at the project;
- Undertake mining and production studies on the recommencement of operations at Black Swan, including both the previously announced 150,000 tonne-per-annum and 1,100-tonne-per-annum processing circuits;
- Complete studies on the potential to mine and transport ore from Windarra to Black Swan for processing;
- Review the exploration potential of Lake Johnston and Windarra and undertake drilling if suitable targets are identified; and
- Support general working capital.
Drilling is set to commence immediately as the company sources additional drill rigs to further accelerate its proposed program of works.