American Rare Earths Ltd (ASX:ARR) has entered into a binding commitment for a placement of 38.8 million shares to Fidelity International, after which Fidelity will hold an equity interest of about 9.9%.
The placement will involve 41.1 million shares at A$0.148 a share for total funds raised of about A$6.1 million before expenses.
This placement price represents a 4.5% discount to the last trading price of A$0.155 prior to the placement and a 9.6% discount to the 5-day volume-weighted average price (VWAP).
Well known investment partner
American Rare Earths managing director and CEO Chris Gibbs says: "Our vision is to build the next major rare earth and critical minerals company and play a key role securing supply for the United States of America.
“We are delighted to have the confidence of a high-quality, long-term institutional investor such as Fidelity to support our growth plans.
"Fidelity is a well-known investment partner in our industry and such a large initial stake demonstrates their commitment that we have the right team and world-class assets to deliver results.
"The opportunity to bring Fidelity onto the register means we can accelerate the planned scope of works for both the La Paz and Halleck Creek REE projects."
Shares allocated to Fidelity will settle on December 9, 2021, and participation from the managing director for a placement of two million shares at $0.148 will be subject to shareholder approval.
Taylor Collison Limited acted as placement agent to the placement.
Use of funds
With a portfolio of rare earths assets, ARR is anticipating a high tempo of activity in the coming 18 months and beyond.
The key focus is completing the metallurgical test-work, drilling the new ore body in the SW area, resource expansion drilling and preparing a Preliminary Economic Assessment (PEA) for the La Paz Project.
In addition, funds will be used to complete the maiden drill program to identify a JORC resource and conduct metallurgical test-work for the Halleck Creek Project.
About American Rare Earths
American Rare Earths owns the highly prospective La Paz Rare Earths Project, 170 kilometres northwest of Phoenix, Arizona.
The project’s resource of 128.2 million tonnes at 0.037% total rare earth elements (REE) is less than 30 metres below the surface and is contained within just 525 acres of ARR’s total La Paz footprint of 5,143 acres that points to potential resource upside.
As a large tonnage, bulk deposit, La Paz is also potentially the largest-rare earth deposit in the USA and benefits from containing very low penalty elements such as radioactive thorium and uranium.
ARR acquired a second US REE asset in the Searchlight Rare Earths Project in the first half of 2021. ARR also acquired a third US REE asset, the Halleck Creek Project in Wyoming, in June 2021.