Funds will be raised through a 1:4 entitlement issue at $0.023 per share.
The non-renounceable rights issue is priced at $0.023 per share, which has been revised from the original January offer details. Originally, it was proposed that a 1:5 rights issue would raise circa $4 million at an offer price of $0.026 per share.
Support from company executives
A number of company executives have supported the company’s strategy by indicating they will participate in the issue. Bernard Olivier, managing director, said: “This entitlement offer provides shareholders with a further opportunity to participate in Mustang’s growth.
“We believe we are well on track to establishing Montepuez as a world-class ruby project. “The ongoing ruby bulk sampling and exploration campaign in coming months will be funded predominantly by this raising as we continue to refine our ruby marketing strategy with increasing market intelligence.
“Equivalent funds will be dedicated to exploration at the high-grade Caula Graphite Project aimed at increasing the resource and fast-tracking feasibility studies as part of our strategy to supply the lithium battery market.”
The offer price represents a 23% discount to the 15-day VWAP and an 11.5% discount to the last closing price.
Regius to take up $200,000
Mustang’s largest shareholder, with 7.74% of issued capital, and operator and founder of its ruby and graphite projects, Regius Resources Group Ltd, will take up $200,000 of its entitlement.
Regius is the investment company of Mustang’s chief operating officer Cobus van Wyk and director Christaan Jordaan and their participation is a positive sign for other investors.
Non-executive chairman Ian Daymond has also confirmed his intention to take up his full entitlement.
There will be 40.58% of the funds allocated to Montepuez and the same percentage to Caula with 17.42% for working capital and 1.42% for offer expenses.
The offer follows the company securing a $19.95 million funding facility under a convertible note facility with Arena Investors LP, a U.S. institutional investor.
Mustang can draw down the funds in seven tranches with the first tranche of $1.9 million to be received on signing the convertible note deed.
The follow-on tranche of $3.8 million will be available to the company in May 2018.
Mustang will receive the balance of $14.25 million in five further draw-downs of $2.85 million over two years.
The company is achieving consistent production of high-quality gems from the Montepuez project after making improvements to the processing plant.
Average grades have increased by more than 10% from October 2017 compared with the total average grade achieved from previous bulk sampling.
Mustang is also on target to complete a concept study at its 80%-owned Caula project during the June quarter of 2018.
The study will pave the way for Mustang to begin a definitive feasibility study on the graphite project which has a resource of 5.4 million tonnes at 13% total graphitic carbon for 702,600 tonnes of contained graphite.
Source: ProActive Investors Australia