ASX-listed Peak Rare Earths has secured firm commitments from institutional investors for a A$27.5m ($18m) placement to develop its Ngualla rare earth project in Tanzania.
Nearly 55 million new shares will be issued in the two-tranche placement at $0.50 each.
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In the first tranche, the Australian mineral explorer will issue around 28.6 million new shares worth $14.3m.
The second tranche is expected to generate $13.2m through the issuance of nearly 26.4 million new shares.
Peak seeks shareholder clearance for the second tranche at an extraordinary general meeting scheduled in mid-June 2023.
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Peak’s largest shareholder, Shenghe Resources, has committed to increasing its stake in the business to 19.9% from 19.8% via the placement.
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By GlobalDataShenghe currently has a nominee director on Peak’s board.
Peak directors Russell Scrimshaw and Ian Chambers committed to subscribe for 300,000 and 315,000 shares, respectively.
The directors and Shenghe will take part in the placement’s second tranche.
Barrenjoey Markets and Canaccord Genuity (Australia) will jointly manage the placement.
Proceeds will be used for early works, updated environment and social studies, front-end engineering design and construction contracts.
The infusion will also meet working capital needs, general corporate overheads, and expenses tied to exploration and drilling.
Ngualla is estimated to require a $321m investment, with an initial mine life of 24 years.
It is said to host one of the world’s largest and highest-grade neodymium praseodymium rare earth deposits.
Peak executive chairman Russell Scrimshaw said: “The placement strengthens Peak’s balance sheet and ensures that it is well-capitalised to commence early works, front-end engineering and design and finalise binding offtake arrangements and project financing discussions, which are progressing well. The placement has been well supported by Peak’s existing shareholders and will further introduce a range of new, high-quality institutional investors to the register.”
Last month, Peak reached a binding framework agreement with the Tanzania Government on the Ngualla project.
This offered the basis for creating Mamba Minerals Corporation (MML), the company’s joint venture (JV) with the government for the operation of the project. Peak has an 84% stake in the JV while the government owns the remaining 16%.
This was followed by the awarding of a special mining licence to MML.
A final investment decision on the project is expected by the end of September this year.
