Strandline Resources completes institutional offer for its Coburn mineral sands project
The completed placement and institutional offer is part of Strandline’s planned $122 million equity raise to fund development of its WA project.
Mineral sands explorer Strandline Resources (ASX: STA) has announced the successful completion of an institutional entitlement offer to cover more than 60% of a planned $122 million equity raise.
Earlier this week, the company announced the fully underwritten equity raise to fund the development of its 100% owned Coburn mineral sands project in Western Australia.
The institutional offer comprises the issue of about 191.1 million new shares under a placement to raise about $39.2 million and about 171.3 million new shares under an institutional entitlement offer to raise about $35.1 million. The offer price was $0.205 per share.
Strandline’s largest shareholder Tembo Capital has already committed to taking up 70 million shares in the equity raise worth about $14.4 million. Together with the institutional offer, this will raise about $89 million – about 73% of the total $122 million sought by the company.
Strandline managing director Luke Graham said he is pleased by the strong support received for the placement and entitlement offer, which attracted significant demand from both eligible existing and new institutional investors in Australia and internationally.
“The company is set to make a final investment decision once all proceeds from the equity raise are received next month and plan to commence full-scale construction immediately after that, putting Coburn on track for production in the second half of 2022,” he said.
The planned $122 equity raise also follows a US$60 million (A$78 million) bond issue and a $150 million Northern Australia Infrastructure Facility loan to bring the Coburn project into production by the second half of 2022.
Retail entitlement offer
The retail component of the entitlement offer of about $47.3 million is scheduled to open on 7 April and close on 20 April 2021 unless extended.
Eligible retail shareholders will be able to subscribe for one new share for every 1.3 Strandline shares held.
The placement and institutional entitlement offer is due to settle on 9 April while settlement of the retail entitlement offer is slated for 27 April.
Shaw and Partners and Morgans Corporate are the joint lead managers, bookrunners and underwriters to the offer.
Final investment decision on Coburn project anticipated next month
Strandline said funds from the equity raising will complete financing of its Coburn mineral sands project, enabling the company to reach a final investment decision in April.
The Coburn project is considered one of the largest, most advanced undeveloped mineral sands projects in the world with a definitive feasibility study showing high-margin cash flows with a $705 million pre-tax net present value and an internal rate of return of 37%.
The project’s large JORC-compliant ore reserve of 523 million tonnes at 1.11% total heavy minerals underpins a 22.5-year mine life with the capacity to produce 34,000t per annum of premium zircon, 54,000tpa zircon concentrate, 110,000tpa ilmenite and 24,000tpa rutile.
According to Strandline, this zircon supply would fulfill about 5% of the global zircon market.