28/01/2022 - 11:30

Agrimin seeks $7m for Mackay

28/01/2022 - 11:30

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Potash hopeful Agrimin has sought further funds needed to develop its $637 million Mackay project in the Pilbara, as the company closes in on a final investment decision.

Agrimin seeks $7m for Mackay
Agrimin claims the Mackay project is the world's largest undeveloped brine deposit. Photo: Agrimin

Potash hopeful Agrimin has sought further funds needed to develop its $637 million Mackay project in the Pilbara, as the company closes in on a final investment decision.

Agrimin this morning announced it would undertake a $7 million capital raising to fund ongoing project financing activities, as well as front-end engineering design work, project tenure, environmental approvals, and general working capital.

That’s on top of a $2 million grant from the federal government, awarded to Agrimin in December.

Chief executive Mark Savich said the grant and capital raising ensured the Nedlands-based company was well-funded in the year ahead.

It comes a few days after Agrimin signed another offtake deal for Mackay, with fertiliser distributor Nitron Group committing to about 25 per cent of the project’s planned production capacity.

Mr Savich said the deal recognised a shift toward low carbon, organic sulphate of potash (SOP).

Agrimin also has an offtake in place with China’s main potash importer, Sinochem Fertilizer Macao.

The capital raising consists of a $5 million placement and $2 million share purchase plan, with both offers priced at 35 cents a share. It's almost an 18 per cent discount to Agrimin's last traded price of 42.5 cents.

Euroz Hartleys and Bell Potter Securities are lead managers to the placement.

Agrimin also plans to issue about 46 million bonus shares on a one-for-five basis, which Mr Savich said was in recognition of the value added to Mackay.

A final investment decision for the project is expected in mid-2022.

“We strongly believe the company’s current market capitalisation does not reflect the value that’s been added as the company nears a final investment decision for what will be the world’s largest and lowest cost seaborne supply of SOP,” Mr Savich said.

The Mackay project has a mineral resource of 123 million tonnes, which Agrimin claims to be the world's largest undeveloped brine deposit.

The company is proposing a 40-year operation with a production capacity of 450,000 tonnes per annum. Nitron has committed to purchasing 115,000tpa for a seven-year period and Sinochem 150,000tpa for 10 years.

Agrimin's shares were down 2.4 per cent at 1:10pm AEDT to trade at 42 cents.

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