Which Canadian lithium explorer is tapping the market for cash this morning?
There’s plenty of cash flying around for lithium explorers right now, and another has gone out to the market aiming to ratchet up the scale of its operations in Canada’s hot James Bay lithium district.
Cygnus Metals (ASX:CY5) is one of over 40 ASX players now kicking rocks around Canada, most of them in the James Bay region where David Southam’s firm is drilling out its Pontax project.
But it is one of only a handful to boast a JORC compliant resource, announcing a maiden 10.1Mt at 1.04% Li2O on Monday at Pontax, located just 30km south of Allkem’s (ASX:AKE) James Bay resource where the global lithium giant has outlined 110.2Mt at 1.30% Li2O and is hurtling toward development.
Cygnus entered a trading halt for a capital raising this morning. It headed into the new financial year with around $5.5m in the bank, and is planning to raise at least $7.2 million through a placement according to a term sheet.
Canaccord Genuity and Euroz Hartleys are leading the deal, with Shaw and Partners as co-managers.
The placement will take place at 22.5c a share, an 11.8% discount to CY5’s last traded price of 25.5c, 19.5% discount to its five-day VWAP and 20.1% discount to its 10-day VWAP.
It will comprise a block trade of $4.2 million under a flow-through placement along with a $3m institutional placement, which Cygnus could accept over-subscriptions for up to $2m.
After the placement is done Cygnus plans to conduct an SPP for existing shareholders to raise up to a further $2m, meaning it could raise as much as $11.2m.
The funds will be used to continue resource extension and step-out drilling at Pontax, where Cygnus is earning up to a 70% share in the project — originally held by TSX-V listed Stria Lithium — via exploration spending.
Cygnus says it has spent the equvalent of 55c per resource tonne in drilling at Pontax so far, outlining the maiden resource within a year of ownership, with the project containing 1.2km of strike and boasting mineralisation some 9km from the Pontax Central resource.
It will also put funds to exploration activities at the earlier stage Auclair and Sakami projects, respectively 60km from Nemaska Lithium’s 56Mt Whabouchi resource and 44km west of Patriot Battery Metals’ 109Mt Corvette discovery.
Cygnus’ trading halt comes the same day Core Lithium (ASX:CXO) announced it had wrapped up a $100 million placement to domestic and offshore instos at 40c per share.
That sent its shares 22% lower today, with a $20m SPP also launched to restock the Finniss lithium project owner’s coffers.
Core has faced challenges hitting planned recoveries and production levels through the early days of the NT’s first lithium operation.
It will produce under 100,000t of spodumene concentrate per annum over FY24 and FY25, well below the 175,000tpa nameplate capacity of the operation from a DFS in 2021.
CXO said the raising would ‘preserve balance sheet flexibility’ while completing early works on its second mine at Finniss, BP33, where an FID is due in the first quarter of calendar 2024.
It will also help fund Core’s FY24 exploration program, plant optimisation initiatives and sustaining capital projects, as well as provide additional funding for working capital and study works on growth projects including BP33, Carlton and the Finniss plant.
The plant is currently being supplied from the starter Grants open pit, but the underground BP33 orebody is viewed as the ‘cornerstone asset’ at Finniss, which contains an overall mineral resource of 30.6Mt at 1.31% Li2O and is 88km from the port of Darwin.
Core will have pro forma cash of $201-221m after the placement and SPP.