South Harz Potash has received binding commitments for a $1.25m placement and is raising a further $1.2m through a rights issue. Pic: via Getty Images.
Mining
Special Report: South Harz Potash is raising up to $2.4m to finalise delivery of an extended pre-feasibility study for its Ohmgebirge potash project in Germany’s South Harz potash district.
Ohmgebirge has a resource of 325Mt grading 13.14% K2O that essentially covers the entire mining licence.
The vast majority of this – 290Mt at 13.47% K2O – is contained within sylvinite – an important source of potash – with 89% of the sylvinite being in the higher confidence indicated category that has enough geological certainty for mine planning.
South Harz Potash’s (ASX:SHP) 2022 scoping study outlined a robust 21-year, 1Mtpa MOP operation at Ohmgebirge – the first of five projects within the company’s portfolio – that will deliver post-tax net present value and internal rate of return (IRR) of US$1.28bn and 26.6% respectively.
Higher IRRs make investments more desirable, making it a good way for investors to assess the potential return on their investment.
Additionally, the broader South Harz project portfolio in Germany has a globally large-scale potash resource estimate of 5Bt at 10.6% K2O in the inferred category and 258Mt at 13.5% K2O in the indicated category, providing it scale similar to BHP’s (ASX:BHP) Jansen potash project in Saskatchewan, Canada.
SHP has already received binding commitments from sophisticated and professional investors for a placement of ~54.1 million shares priced at 2.3c each to raise $1.25m.
This represents a 17.9% discount to the company’s 10-day volume weighted average price of 2.8c.
Additionally, the company will look to raise up to $1.2m through a renounceable rights issue of one new share for every 15 shares held to eligible shareholders.
To highlight their belief in the company and the Ohmgebirge project, SHP directors will take up their full rights and partially underwrite $170,000 of the rights issue.
Proceeds from placement and rights issue will be used to finalise delivery of the Ohmgebirge PFS targeting utilisation of the brownfield, third-party Bernterode shaft infrastructure as the base case development pathway.
The company is also continuing cost efficiency initiatives delivering streamlined organisational presence and activities.
“South Harz board and management continue to minimise expenditure unrelated to completion of the PFS and appreciate the support of the existing shareholder base, who have demonstrated an unwavering belief in the immense potential value inherent in our flagship Ohmgebirge potash project,” SHP managing director Luis da Silva said.
“The team are dedicated to advancing this world-class development opportunity and committed to becoming the sustainable European MOP supplier of choice.”
This article was developed in collaboration with South Harz Potash, 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.
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