South Star Battery Metals Corp said it has completed a non-brokered private placement of units for total proceeds of $1,906,990.
The majority of participation in the private placement was with key institutional investors and insiders. Net proceeds from the private placement will be used for advanced materials sample preparation, commercial agreements, project finance and general working capital requirements for the company.
The private placement consists of 3,467,254 units priced at a post-consolidation price of 55 cents per unit. Each unit consists of one common share and one common share purchase warrant. Each warrant entitles the holder to purchase one additional common share of the company at an exercise price of $1.25 per common share for a period of five years from the date of issue.
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The securities are subject to a four-month hold period from the date of closing and approval by the TSX-V, expiring October 24, 2022.
The company issued an aggregate of 1,636 finders' warrants in connection with the private placement (equal to 6% of the number of units sold to subscribers introduced to the company by the finders) and $54,300 in cash finders' fees were paid to certain finders (equal to 6% of the gross proceeds of the offering sold to subscribers introduced to the company by the finders).
If, during a period of 10 consecutive trading days between the date that is four months following the closing of the private placement and the expiry of the warrants, the daily volume weighted average trading price of the common shares of the company on the TSX Venture Exchange (or such other stock exchange where the majority of the trading volume occurs) exceeds $2.50 on a postconsolidation basis for each of those 10 consecutive days, the company may, within 30 days of such an occurrence, give written notice to the holders of the warrants that the warrants will expire at 4.00pm Vancouver time on the 30th day following the giving of notice unless exercised by the holders prior to such date.
Upon receipt of such notice, the holders of the warrants will have 30 days to exercise their warrants. Any warrants that remain unexercised at 4 p.m. Vancouver time on the 30th day following the giving of such notice will expire at that time.
Two directors, including a member of management, and one officer of the company subscribed in the private placement for an aggregate of 1,071,817 units for gross proceeds of $589,500. Each transaction with the directors and officers constitutes a related party transaction as defined under Multilateral Instrument 61-101, Protection of Minority Security Holders in Special Transactions.
South Star is a Canadian battery metals project developer focused on the selective acquisition and development of near-term production projects in the Americas. South Star's Santa Cruz graphite project, located in southern Bahia, Brazil, is the first of a series of industrial and battery metals projects that will be put into production.
Brazil is the second-largest graphite-producing region in the world with more than 80 years of continuous mining. Santa Cruz has at-surfac mineralization in friable materials and successful large-scale pilot-plant testing (greater than 30 tonnes) has been completed. The results of the testing show that approximately 65% of graphitic carbon (Cg) concentrate is plus-80 mesh with good recoveries and 95% to 99% Cg. With excellent infrastructure and logistics, South Star is carrying its development plan toward phase 1 production, projected in Q2 2023.
South Star's next project in the development pipeline is a project in Alabama, located in the middle of a developing electric vehicle, aerospace and defence hub in the southeastern United States. The project is a historic mine active during the First World War and the Second World War. Trenching, sampling, analysis and preliminary metallurgic testing have been completed. The testing indicated a traditional crush/grind/flotation concentration circuit achieved grades of approximately 96% to 97%, with recoveries of approximately 86%.
South Star is executing on its plan to create a multiasset, diversified battery metals company with near-term operations in strategic jurisdictions.
Contact the author at jon.hopkins@proactiveinvestors.com