Suvo can crack on for kaolin after investors come running for a piece of $7.5M capital raise
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Australia’s only hydrous kaolin producer has received firm commitments from all over the market to raise $7.5m to pour into the expansion of its Pittong plant in Victoria.
It’s Monday morning and Aussie kaolin producer and silica sand explorer, Suvo Strategic Minerals Ltd (ASX:SUV) has seen the money come in from all directions, reporting strong demand from new and existing sophisticated and institutional investors.
SUV says binding commitments are already in place for some $7.5 million ahead of costs via a share placement at $0.085 a pop.
Citing strong demand from new and existing sophisticated and institutional investors, the company is sweetening the offer via a – one for three free attaching unquoted option – exercisable at $0.15 and expiring on June 30, 2023.
Suvo is also putting a share purchase plan out there, looking to raise up to a further $2 million – under the same terms – but warns it won’t be accepting oversubscriptions under the SPP.
The issue price is a neat 11% discount on the 15 day volume weighted average price (VWAP) and a better 12.5% discount on the five day VWAP of $0.097.
The cash has work waiting for it – primarily to supercharge the expansion of SUV’s Pittong hydrous kaolin plant and then there’s money to invest in fast tracking the project studies on Suvo’s kaolin and silica sand assets on the other side of the country in Western Australia.
So Pittong is looking at a $5 million upgrade and that’s forecast to bump processing capacity to ~60,000 tonnes per annum (tpa) by 2023. Not such a bad achievement nor turnaround time, considering the site is currently producing ~25,000 tpa.
SUV has told the market the increase will be via “ materially enhanced processing capacity and improved energy efficiencies,” with the rather large, newly-procured and fully-automated press deck equipment.
The company says the expanded capacity will be done in parallel with current production and won’t be putting a single dent in SUV’s existing operations.
The timing is right for SUV, the firm delivering calendar year 2021 gross revenue of $13.5 million and an EBITDA just shy of $3 million – headlined by a near 25% jump on production levels over 2020.
A little forethought in SUV’s procurement strategy has gone along way to mitigating risks which come with increased manufacturing lead times, cost fluctuations and the widespread supply delays, currently facing the mining sector.
Suvo funded its three state of the art press deck systems and all ancillary equipment (costing ~A$1.5 million), back in August 2021, from existing cash flows.
The company expects the new facilities to be completed in the first quarter of 2023.
This article was developed in collaboration with Suvo Strategic Minerals Ltd, 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.