Reed Resources has raised $6.4 million and will raise a further $4.5 million in a share purchase plan to step up exploration and development activities on three separate projects.
Reed Resources has raised $6.4 million and will raise a further $4.5 million in a share purchase plan to step up exploration and development activities on three separate projects.
The company said it had placed 19,500,000 shares at 33 cents in an institutional placement with clients of Patersons Securities, and eligible existing shareholders will be given a chance to apply for $15,000 worth of new shares for the same price as Patersons' clients.
The company's flagship projects, Mount Marion Lithium Project and the Barrambie Vanadium Project in WA are set to benefit from the funds.
Additionally, subject to final due diligence the funding enables Reed to exercise its option to acquire the Nimbus plant, securing a long term milling solution for its gold operations.
Reed shares closed down 1.5 cents, or 3.85 per cent, to 37.5 cents after returning from a trading halt.
Full announcement below:
REED RESOURCES A$10.9M CAPITAL RAISING THROUGH PLACEMENT AND WNDERWRITTEN SPP
Highlights
Reed completes A$6.4M Placement to institutional and qualified investors;
Company to undertake a Share Purchase Plan on same terms to raise an additional A$4.5M;
Patersons Securities Ltd acted as Lead manager to the Placement and has fully underwritten the Share Purchase Plan; and
Funds to be applied to advance Mount Marion Lithium and Barrambie Vanadium projects and to exercise option over Nimbus plant.
Australian diversified resources company Reed Resources Ltd (ASX: RDR) (the "Company" or "Reed") plans to step up exploration and development activities on two of its advanced projects and fund the acquisition of the Nimbus plant, following the completion of a A$6.4M Placement and confirmation of a fully underwritten A$4.5M Share Purchase Plan (SPP). A$6.4m Placement and A$4.5m Underwritten Share Purchase Plan
Reed has placed 19,500,000 shares at A$0.33 per share to raise A$6.4 million before costs to qualified investors, domestic and international institutional clients of Patersons Securities Ltd. The shares to be issued are within the discretionary capacity of the board under the ASX Listing Rule 7.1.
The Company is also pleased to provide an opportunity to its eligible existing shareholders to participate in the equity raising by undertaking a SPP at the same issue price of A$0.33 per share to raise up to a further A$4.5 million (before costs).
Eligible existing shareholders will each have the opportunity to subscribe for up to A$15,000 of shares.
Patersons Securities Ltd acted as Lead Manager to the Placement, which was heavily oversubscribed and has fully underwritten the SPP.
Use of Funds
Funds raised will be used to advance two of the company's flagship projects, Mount Marion Lithium Project and the Barrambie Vanadium Project in Western Australia (see Figure 1). Additionally, subject to final due diligence the funding enables Reed to exercise its option to acquire the Nimbus plant, securing a long term milling solution for its gold operations.
On 13 August 2009 Reed announced it had entered into an Option agreement to acquire the high grade Mount Marion Lithium Project. Funds raised will be used to:
- Evaluate fast-tracking of the proposed spodumene operation via the use of a mobile plant for crushing, separation and export;
- Undertake a comprehensive drill-out program so as to enable the company to complete a new JORC (2004) compliant resource estimate; and
- Undertake a metallurgical drill program as a precursor to commencing the evaluation of a larger operation on-site and integrated through to production of lithium carbonate for the battery market.
Reed has an option to acquire the Nimbus Silver Project and Processing Plant (see ASX announcement 28 April 2009). This option expires on 31 August 2009 and subject to the completion of due diligence Reed is now able to use a portion of the funds raised to exercise this option and acquire the plant. The Company is currently evaluating its existing shallow open-pit resources so as to provide a base-load and enable the plant to be refurbished and recommisioned.
At the Barrambie Vanadium Project the Company is planning to commence the Front End Engineering & Design (FEED) test work. The project is currently in the approvals process and post the release of the Public Environmental Review document, Reed will engage advisors to commence the strategic partner selection process to advance this world class project given the positive outcomes of the Definitive Feasibility Study released on 5 May 2009.
Shareholder Purchase Plan Details
The SPP will provide eligible ordinary shareholders with the opportunity, without incurring brokerage, commission or other transaction costs, to subscribe for up to $15,000 of RDR ordinary shares.
The offer of shares under the SPP will be made at A$0.33 (33 cents) per share. The SPP will be capped at $4.5 million and Reed will scale back applications if they exceed $4.5 million in aggregate. RDR has entered into an Underwriting Agreement with Patersons Securities Ltd to fully underwrite the SPP.
The terms of the SPP and Patersons Securities' underwriting of the SPP will be subject to shareholder approval in accordance with the ASX Listing Rules. While applications for shares under the SPP will be open prior to the General Meeting to approve the SPP, the allotment of shares under the SPP will be subject to shareholder approval being obtained and therefore will occur after the General Meeting.
Following is an indicative timetable for the SPP (Reed reserves the right to vary these dates):
Action Date
SPP Record Date (5:00pm WST) 25 August 2009
Dispatch Notice of Meeting and
SPP documents to shareholders 3 September 2009
SPP Closing Date (5:00pm WST) 25 September 2009
General Meeting to approve SPP 2 October 2009
Settlement of SPP and allotment of SPP
shares 5 October 2009
Full details of the SPP and the final timetable will be set out in the SPP offer document and Notice of Meeting sent to shareholders.
The offer will only be open to "eligible shareholders", being shareholders who are registered holders of Reed shares as at 5:00pm (WST) on Tuesday, 25 August 2009 (SPP Record Date) with a registered address in Australia or New Zealand who are not acting for the account or benefit of U.S. persons.
