South Star Battery Metals Corp. (TSX-V:STS, OTCQB:STSBF) said it has completed the first tranche of its previously announced non-brokered private placement for total proceeds of C$2.3 million which will be used for exploration, development, construction activities, corporate general and administrative, and general working capital requirements.
The company said the majority of participants in the first tranche were global institutional investors familiar with the battery metals and mining sectors.
The funds for closing the second tranche of the financing have been committed and received by the company and are being held in escrow, pending TSX Venture Exchange review of a personal information form. The company anticipates that the second tranche will exceed the amount required to meet the condition precedent to the Phase 1 closing under the previously announced Sprott Private Resource Streaming and Royalty Corp streaming agreement.
READ: South Star Battery Metals submits final mining license application for its Santa Cruz Graphite project in Brazil
The company said it anticipates closing both the second tranche of the financing and the Phase 1 closing under the Sprott Agreement in November 2022.
The release of Phase 1 funds of US$10 million for capital expenditures (capex) due on closing under the Sprott Agreement will make South Star fully funded for the construction of the Phase 1 plant and mine at its Santra Cruz graphite mine in Bahia, Brazil.
South Star CEO Richard Pearce said this was truly a watershed event for the company in its march to production.
“Once we complete the Phase 1 closing under the Sprott Agreement, we will be fully funded for Phase 1 capex and will deliver on our promise and commitment to be the first new graphite production in the Americas since 1996,” he said.
He added that the company was releasing contracts for major equipment and would start earthworks shortly, with commercial production planned for the end of 2023.
“One thing is certain, there hasn't been a better time in the last 20 years to be bringing a critical battery metals project into production, and the business case for graphite gets better with every passing month,” Pearce said.
Sprott managing partner Michael Harrison added that Sprott was pleased to partner with South Star by providing both equity financing and the construction capital for the Santa Cruz graphite project.
“We have and will continue to provide financing required to increase production of minerals and metals critical to energy storage to further the energy transition to renewables,” Harrison said.
New restricted share unit plan and stock option plan
The company also announced that following its shareholder meeting on October 12, 2022, it has adopted a restricted share unit (RSU) plan and a new stock option plan.
The RSU Plan governs the granting of any RSU granted under the fixed RSU Plan, to directors, officers, employees and consultants of the company or a subsidiary of the company.
South Star said the maximum number of RSUs issuable under the RSU Plan is 2,400,893 common shares, being 10% of the issued and outstanding common shares of the company at the time the RSU Plan was implemented.
The 2022 Stock Option Plan is a rolling stock option plan which governs the granting of stock options to directors, officers, employees and consultants of the company or a subsidiary of the company for the purchase of up to 10% of the issued and outstanding common shares in the capital of the company from time to time.
The company currently has 1,439,000 options outstanding, leaving 961,893 options available for grant.
Further information about the financing, the RSU plan, and the new stock option plan can be found here.
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 emily.jarvie@proactiveinvestors.com
Follow her on Twitter @emilyjjarvie