PERTH (miningweekly.com) – Potash developer Salt Lake Potash will raise A$15-million through the placement of unsecured zero-coupon convertible notes to fund the continued development of its Lake Way project, in Western Australia.
The ASX-listed miner on Thursday said that it had received firm commitments from corporate and institutional investors, with the convertible notes structured as deferred equity with zero coupon and mandatory conversion into equity at the lower of 45c a share or a 5% discount to any future equity raising of at least A$10-million.
Fellow-listed Equatorial Resources has subscribed for A$100-million of the unsecured convertible notes, saying its investment in Salt Lake followed a detailed review focused on investigating opportunities related to Salt Lake’s current financing requirements and operational progress.
Equatorial told its shareholders that the timing of the investment in Salt Lake was opportunistic, with the company believing Salt Lake was currently undervalued.
“The convertible notes provides Equatorial with a discounted investment entry price at a time when a number of near-term value catalysts have the potential to drive a significant re-stating of Salt Lake’s share price. These catalysts include completion of project funding, completion of process plant construction, and commencement of production in the first quarter of 2021,” the company said in a statement.
Salt Lake CEO Tony Swiericzuk on Thursday said that the company was pleased to complete the financing with the support of existing and new shareholders.
“These funds will enable the company to continue the rapid development of the Lake Way project on schedule, as site construction activity accelerates through July. Significant progress has been made on the debt financing in recent weeks and we expect to be in a position to deliver full project financial close in the weeks ahead,” he said.
The Lake Way project is expected to produce 245 000 t/y of sulphate of potash (SOP) over a mine life of 20 years, based on the high grade probable ore reserve of 5.4-million tonnes SOP.