After a failed attempt to lock-in a joint venture on its lithium assets in Argentina, Latin Resources (ASX: LRS) has revived investor faith with news it has agreed to acquire the Noombenberry halloysite-kaolin project in Western Australia.
Latin Resources has entered a conditional binding terms sheet to acquire Electric Metals Pty Ltd, which owns 100% of Noombenberry and the Big Grey silver-lead project.
Both assets are in WA, with Noombenberry covering 54 square kilometres near Merredin, which is less than 300km from Perth and the accessible Fremantle Port.
Meanwhile, Big Grey encompasses 138sq km of granted exploration tenements in the state’s Paterson region, which is known to host some of Australia’s largest copper and gold mines.
Noombenberry halloysite acquisition strategy
Latin’s strategy behind the acquisition is to get its hands on Noombenberry.
According to Latin, the project’s kaolinite-halloysite ore represents a “low risk commodity” with minimal ground disturbance required to extract the minerals.
Halloysite is a globally scarce mineral with main consumers including ceramics and petroleum sectors.
Additionally, halloysite faces emerging markets in the technology space including nanotube and cancer therapeutics.
Under the acquisition terms, Latin will issue Electric Metals’ vendors 25 million shares plus 6.25 million options at $0.012 with the options holding an expiry date of 31 December 2022.
The vendors will also receive 16.5 million in milestone shares and 4.125 in options upon Latin developing a JORC inferred resource of 3 million tonnes at 30% ceramic alumina or greater.
Capital raising to fund project advancement
To shore up cash for working and other capital requirements, Latin has also launched a $1 million placement to professional and sophisticated investors.
Latin will issue 166.6 million shares at $0.006 each including one for two free-attaching options.
The company will also complete a convertible note issue to raise $520,000.
Ordinary shareholders will receive a 20% discount to the historic five-day volume weighted average price with a floor price of $0.004.
Th notes will pay a 12% per annum coupon, with interest paid quarterly via cash or shares.
Additionally, note holders will receive 80 free attaching options for every $1 raised.
All options issued will have an expiry date of 31 December 2020.
Sell or farm-out South American lithium assets
Due to the decline in the lithium market, Latin stated it would only continue its hard rock lithium projects in Argentina or Brazil via a sale or joint venture.
Latin said it remained “confident” it would attract a suitable partner to progress the assets.
By early morning trade, Latin’s share price was at $0.025 – up 31.58% on the day and almost 178% on the week.