Davenport Resources raises $10m for German potash, balance sheet strongest ever
Davenport Resources will use placement proceeds to advance its German potash projects.
Institutional and sophisticated investors along with existing shareholders have injected a fresh $10 million into Davenport Resources (ASX: DAV), with the company claiming the “ambitious” raising places it “in its strongest financial position to date”.
Directors and new investors also contributed to the raising.
Davenport says its balance sheet has been strengthened to enable the company to advance its German potash projects with their combined 5.3 billion tonnes of resources — the largest in Western Europe — including confirmatory drilling at the Ohmgebirge project.
Drilling will allow an upgrade at Ohmgebirge from inferred resources to measured and indicated.
A definitive feasibility study of the project’s economics will follow.
Ohmgebirge at present contains a resource of 325 million tonnes at 13.14% potassium oxide (K2O) for a contained 43Mt.
Significant work program ahead
Chief executive officer Chris Gilchrist described the “ambitious” raising as “overwhelmingly successful”.
“We can now look forward to an exciting journey leading the most significant work program we have undertaken to date,” he added.
“We have mapped out in detail the tasks ahead,” Dr Gilchrist said
Shares were issued under the placement at $0.045 each. For every two shares subscribed, participants will receive one unlisted option exercisable at $0.08, expiring after two years.
Soon after the announcement, Davenport’s shares rose to $0.059.
Aim to restore Germany as potash power
Davenport’s projects are located in the South Harz potash district, once one of the world’s most important muriate of potash (MOP) producing regions, with a history of mining going back over 120 years.
Prior to the re-unification of Germany in the 1990s, the former German Democratic Republic (usually known as East Germany) produced approximately 3.3Mt of K2O annually from mines within and around the district.
It is Davenport’s belief that targeted and strategic investment in the South Harz potash district can support modern day potash production rates similar to those of former times.
Until 1914 Germany supplied almost all the world’s potash, its production rising from 2,293t per annum in 1861 to more than 1.225Mtpa in 1925.
Germany remained the world’s only potash producer until the beginning of the 20th century.
It is still the world’s fifth largest producer, with 2.9Mt output in 2018.