- Galan has received firm commitments to raise $18 million at 46c/sh
- The company’s board and management to subscribe for $1.5 million subject to shareholder approval
- Funds will be used for ongoing HMW Phase 1 development costs
Special Report: With $18m already secured, Galan Lithium plans to undertake a non-underwritten share purchase plan (SPP) offer of $1.5m to existing shareholders for ongoing development costs and resource work.
Galan Lithium (ASX:GLN) has charged out the gate this morning with news of an oversubscribed placement to raise $19.5m for Phase 1 construction activities at the Hombre Muerto West (HMW) lithium brine project in Argentina.
Given the tough market conditions, the strong support is a clear endorsement of GLN’s timely path to low-cost production in the first half of 2025, where a premium 6% lithium chloride concentrate will be produced at a rate of 5,400tpa lithium carbonate equivalent (LCE).
According to the company’s definitive feasibility study (DFS), the Phase 1 operation will deliver post-tax net present value 8% (NPV8) and internal rate of return (IRR) – both measures of a project’s profitability – of US$460m and 36%, respectively, as well as free cash flow of US$54m per year.
Work capital for Phase 1 construction
GLN managing director Juan Pablo de la Vega says the company is pleased with the outcome of the placement, which enhances the overall balance sheet by providing additional working capital and financial flexibility during Phase 1 construction.
Under the placement, GLN will issue 35,869,565 fully paid ordinary shares in the company at 0.46c/sh plus 35,869,565 quoted options.
The issue price represents a 14.8% discount to the last closing price of 54c/sh on 25 January 2024 and a 23.5% discount to the 15-day VWAP of 60c/sh on the same date.
Additionally, GLN directors will subscribe for 3,260,870 new shares, plus 3,260,870 new options on the same terms, raising a total of $1.5m before costs in a second tranche that will be subject to shareholder approval at a forthcoming general meeting.
SPP details
GLN intends to raise up to $1.5m and retains discretion over the allocation of shares per investor.
The SPP, which is not underwritten, will allow eligible shareholders to apply for the maximum allowed of $30,000 of new fully paid ordinary shares, per shareholder.
A booklet containing further terms and conditions of the SPP is expected to be provided to eligible shareholders in the next week or so.
This article was developed in collaboration with Galan Lithium, a Stockhead advertiser at the time of publishing.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.