PERTH (miningweekly.com) – Junior WA Kaolin will raise A$7.5-million in a capital raise to fund production ramp-up and working capital at its Wickepin project, in Western Australia.

The share placement will comprise a single tranche share placement of more than 33.33 million shares, priced at 15c each, to sophisticated and professional investors to raise an initial A$5-million.

The issue price represented an 11.8% discount to WA Kaolin’s last closing price and a 10.7% discount to the five-day volume weighted average share price.

Meanwhile, executive director Alf Baker and CEO Andrew Sorensen have committed to subscribe for A$1-million by way of a converting loan, which will automatically convert to ordinary shares at the same issue price, subject to shareholder approval at a general meeting to be held in early 2023. If shareholder approval is not obtained, the converting loan will be unsecured, repayable at the start of June 2024, accrue interest at 8% a year until paid and otherwise be on standard terms for an agreement of this nature.

In addition to the share placement and converting loan, WA Kaolin will also undertake a share purchase plan (SPP) aimed at raising a further A$1.5-million. The SPP will open on December 6 and close on December 21.

Proceeds from the capital raise will go towards the Stage 2 production ramp-up at Wickepin, where first production from the Stage 1 operation was achieved in October this year, and will steadily increase to around 200 000 t/y by the end of 2023.

“The Wickepin products have hit the market and the high-quality kaolin is attracting a price premium above our expectations. We are now executing contracts with new customers in Australia, Japan and Malaysia as well as our existing offtakers. As the production ramps up over the balance of this financial year, we are forecasting a positive cash flow from our Wickepin operations in the first half of 2023,” said Sorensen.

“The ramp-up to meet the volume demands of our customers requires working capital as we build inventories and fill the export logistics pipeline, and this raise supports that demand as well as allowing us to continue the incremental investment in the planned Stage 2 elements.”