South Star Battery Metals Corp. (TSX-V:STS, OTCQB:STSBF) said it intends to complete a non-brokered private placement of units at a price of C$0.53 per unit to raise funds of up to C$5,250,000.
The Vancouver-based mining company said it has also amended the terms of its stream agreement and promissory note with Sprott Private Resource Streaming and Royalty (B) Corp. for the Santa Cruz graphite project in Brazil.
According to South Star, proceeds from the private placement will be used for exploration, development, construction activities, corporate general and administrative expenses, and general working capital.
READ: South Star Battery Metals gets permit to begin Phase 1 construction of Santa Cruz Mine in Brazil
South Star said it expects the private placement to be fully subscribed and that Canaccord Genuity (TSX:CF, LSE:CF) Corp was engaged as a financial advisor to South Star on the placement.
Each unit will consist of one common share of the company and one common share purchase warrant, South Star said. Each warrant will entitle the holder to purchase one additional common share of the company at an exercise price of C$1.25 per share for a period of five years from the date of issue. The warrants will be subject to an acceleration clause.
When aggregated with the proceeds from the private placement that closed on June 23, 2022, total proceeds are expected to satisfy the condition precedent of the stream agreement that the company raises a minimum of C$6 million, South Star said.
Closing of the private placement is subject to customary closing conditions, including the approval of the TSX Venture Exchange. South Star said it might exercise an over-allotment option allowing it to increase the size of the private placement by up to 15%.
South Star said Sprott has agreed to grant it a 60-day extension to satisfy the Phase 1 conditions precedent for the stream agreement.
According to South Star, Sprott has also advanced $2 million to provide for a maturity date of December 14, 2022, with interest calculated on the principal amount beginning on October 4, 2022, at a rate of 1% per month, compounding monthly.
South Star is a Canadian battery metals project developer focused on the selective acquisition and development of near-term production projects in the Americas.
Contact the author at susie@proactiveinvestors.com