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The good news keeps rolling in for Australia’s Triton Minerals. The company announced Monday that it’s completed a $12-million private placement with a Hong Kong cornerstone investor, as well as institutional groups and “sophisticated investors.” To raise the money, the company issued 34.3 million ordinary shares priced at $0.35 each. According to Triton, the single-tranche placement was oversubscribed.
The good news keeps rolling in for Australia’s Triton Minerals (ASX:TON), which announced Monday that it’s completed a $12-million private placement with a Hong Kong cornerstone investor, as well as institutional groups and “sophisticated investors.”
To raise the money, the company issued 34.3 million ordinary shares priced at $0.35 each. According to Triton, the single-tranche placement was oversubscribed, an indication that those in the graphite space recognize the merits of its work.
Investors who’ve been following Triton will be familiar with that work, and no doubt will not be surprised that the company plans to put net proceeds of the placement towards advancing its Mozambique-based Nicanda Hill graphite project. Though Triton also holds the Ancuabe and Balama South projects, also located in Mozambique, Nicanda Hill is its main focus.
Indeed, a lot has been going on lately at Nicanda Hill. At the beginning of April, Triton announced a US$2-billion offtake agreement for graphite from the project with Yichang Xincheng Graphite, then followed that up midway through the month by signing a letter of intent regarding not only another offtake agreement for Nicanda Hill, but also $200 million in project funding.
That’s a lot of money for one company, but it’s worth noting that Triton won’t be getting all of it right away. In fact, the the first deal doesn’t provide any upfront funds to Triton — the company will receive the $2 billion over the 20-year span of the offtake agreement provided it’s able to produce graphite from Nicanda Hill to Yichang’s specifications and within the agreed-upon time period.
However, as mentioned, the second deal, which is with Shenzhen Qianhai Zhongjin Group, includes a proposed project funding package of 50:50 debt to equity. Specifically, if the deal is finalized, Triton will receive up to US$100 million in direct equity investment, plus a debt facility of up to US$100 million.
Though the plan is for that money to go towards work at Nicanda Hill, both the offtake agreement and funding package are conditional on Shenzhen completing formal due diligence, and on the execution of final binding agreements. With due diligence set for completion by the end of June, the $200 million won’t be in Triton’s hands for some time yet.
That information helps explain why it’s significant that the company closed Monday’s $12-million private placement. Explaining further, Brad Boyle, the company’s managing director and CEO, said in a webcast, “some people may ask why we’ve done a placement now when we’ve got the Shenzhen deal pending. Now, the Shenzhen deal for the funding, the due diligence doesn’t finalize til the end of June, and then there’s another 30 days before we can actually draw down the facility … to get the funding. So we think that’s too big a time gap when we want to meet the end of the … feasibility program — we need to get that data now, we need to get started.”
Looking at exactly where the $12 million will go, the company’s press release states that it will be used to move forward with a definitive feasibility study for Nicanda Hill, as well as “an early works program that includes the construction of access roads and laydown areas.” Some money will also go towards a drill program to sterilize areas for pre-construction work for a graphite processing plant and work camps.
Finally, a portion of the money will be directed to initial drilling at the Ancuabe project, for which Triton recently released what it’s termed “extraordinary metallurgical results.” The plan there is to identify further substantial graphite mineralization.
No word yet on exactly how much more money Triton will need to bring Nicanda Hill into production, but the company’s press release on the Shenzhen deal does state that “the successful finalisation of subsequent definitive agreements will secure full funding for the Nicanda Hill project.” That said, the deadline on when the project needs to enter commercial production is set in stone: the $2-billion offtake agreement with Yichang is dependent in part on the project reaching that stage within 36 months of the agreement being signed.
All things considered, those in the graphite space will certainly be watching Triton moving forward, particularly to see whether its deal with Shenzhen pulls through. At close of day Monday, Triton’s share price was up 6.33 percent, at AU$0.42. It’s up 133.33 percent year-to-date, and an impressive 342.11 percent in the last year.
Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.
Related reading:
Triton Minerals: Rapidly Making Progress in Mozambique
Triton’s Share Price Soars Following $2-billion Offtake Agreement