28/04/2015 - 11:15

South Boulder to raise $6m for Colluli

28/04/2015 - 11:15

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West Perth-based explorer South Boulder Mines has announced another capital raising to fund ongoing work at its Colluli potash project in East Africa.

South Boulder to raise $6m for Colluli
Early site work at South Boulder's Colluli potash project in East Africa.

West Perth-based explorer South Boulder Mines has announced another capital raising to fund ongoing work at its Colluli potash project in East Africa.

South Boulder said it would issue 10.9 million shares at 25 cents each to two foreign investors; Hong Kong-based Well Efficient and London-based Arlington Group Asset Management, to raise $2.74 million.

The company also plans to raise a further $3.35 million through a one-for-12 rights issue, at the same price as the placement, which has been heavily underwritten ($2.5 million) by Perth-based gold explorer Montezuma Mining Company, and privately-held investment vehicle RSR Premier Holdings.

The directors of South Boulder, who together hold about 11 per cent of the company, have announced their intention to take up their entitlements to the rights issue.

The price of the raising is a 20 per cent discount to South Boulder’s closing price of 31.5 cents last Wednesday, before its shares were halted from trade ahead of today’s announcement.

South Boulder plans to use the funds to complete a definitive feasibility study on the Colluli project, as well as build in-house capability to support development of the project, and advance funding discussions, which managing director Paul Donaldson says are the key priorities of the firm.

“The recently completed pre-feasibility study demonstrates a robust project, with attractive economics and a positive future,” Mr Donaldson said.

“The placement not only introduces another sophisticated international investor, but also shows the continued confidence from existing investor, Well Efficient.”

In January, South Boulder completed a $2.1 million placement to Well Efficient at a 6 per cent premium to the company’s 30-day volume weighted average price at the time.

GMP Securities will act as selling agent for any shortfall not taken up by eligible shareholders or the underwriters.

Earlier this month, South Boulder released promising results of test pilots conducted at Colluli, which showed ultra-high purity potassium sulphate grades.

“We have a process and a unique resource which combine to produce a premium fertiliser with a premium grade,” Mr Donaldson said.

South Boulder shares were 3.1 per cent higher at 32.5 cents a share at 11am.

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