South Harz Potash Ltd (ASX:SHP) has raised A$5.3 million at an issue price of A$0.12 to accelerate work at its flagship Ohmgebirge development in Germany.
The placement issue price represents an approximate 12% discount to the 5-day volume weighted average price (VWAP) for South Harz shares of A$0.136 per share. These shares are expected to be issued on or around December 20, 2021.
SHH is a potash exploration and development company with its flagship project in the South Harz Potash District of Germany, midway between Frankfurt and Berlin.
The raise puts the company in a financially strong position backed by a range of new and existing sophisticated and institutional investors, including directors and senior management, displaying their confidence in the project.
Targeting MRE upgrade
The company is now in its strongest financial position to date and well-funded to complete the two-hole drilling program, targeted mineral resource estimate upgrade and scoping study finalisation at Ohmgebirge.
Drilling and assaying of the two drill holes are expected to start in coming weeks targeted to allow South Harz to upgrade a substantial proportion of the current Ohmgebirge JORC (2012) inferred resource estimate of 325 million tonnes at 13.1% K2O to the indicated category.
The South Harz Project hosts a globally significant large-scale potash JORC (2012) inferred resource of 5.3 billion tonnes at 10.8% K2O across four wholly-owned project areas within central Europe.
This comprises three perpetual potash mining licences, Ohmgebirge, Ebeleben and Mühlhausen-Nohra, and two potash exploration licences, Küllstedt and Gräfentonna, covering a total area of about 659 square kilometres.
Scoping study to come
Successful drilling (and other related factors) is expected to allow the release of a comprehensive scoping study for Ohmgebirge, scheduled for completion by the end of Q1 2022.
This new funding also delivers South Harz the ability to rapidly transition into planned feasibility study workstreams on Ohmgebirge during Q2 2022, through providing the flexibility to secure key consultants and book test-work programs in advance.
The additional funds will also allow SHH to drive organisational capability and bolster general working capital, including the recruitment of further specialists in Germany to support the planned development of Ohmgebirge and the broader South Harz Potash Project.
“I would like to thank both new and existing shareholders for their overwhelming support in this raising,” South Harz managing director Dr Chris Gilchrist said.
“The additional funds will allow us to rapidly build on the successes of the past few months. In particular, we are now in a position to accelerate evaluation of our world-class Ohmgebirge development through 2022.
“The entire South Harz team is excited to be on the verge of drilling the first hole under our ownership at Ohmgebirge.
"We believe that the specific geological and geographical attributes of this deposit, and the broader South Harz Project, deliver the strong potential for the finalisation and release of a truly transformational scoping study in late Q1 2022.
“This is set against a background of a global potash market facing increasing supply constraints and geopolitical challenges, evidenced in the rapid and substantial increases in potash prices which the market expects to continue into 2022.
"We believe that South Harz provides premier exposure to a world-class potash development project, located in a Tier 1 operating jurisdiction, at the centre of a key global demand market.”