Convertible Note Funding Minimises Dilution Amid Strategic Talks for Steelpoortdrift

Convertible Note Funding Secured Amid Challenging Market

Vanadium Resources Limited (ASX: VR8) has successfully secured A$783,000 through a convertible note issue, combining cash commitments and conversion of outstanding advisory fees. This capital injection is aimed at bolstering working capital as the company advances strategic equity partnerships for its flagship Steelpoortdrift Vanadium Project.

The funding round saw strong support from key insiders, including Executive Chairman Jurie Wessels and Non-Executive Director Michael Davy, who collectively subscribed for A$150,000 of the convertible notes, subject to shareholder approval. The structure of the convertible note is designed to minimise dilution for existing shareholders, a critical consideration given current market volatility.

Strategic Equity Discussions Gain Momentum

Vanadium Resources is actively progressing discussions with several potential tier-1 strategic equity investors, organisations with proven technical, financial, and operational capabilities to advance large-scale projects. These talks are pivotal as the company aims to move Steelpoortdrift towards a final investment decision (FID) and eventual construction phase.

The convertible note funding provides the company with additional runway to negotiate these partnerships while maintaining operational momentum. It also complements recent cost-reduction initiatives implemented in the fourth quarter of 2024, reflecting management’s commitment to capital discipline.

Allocation of Funds and Convertible Note Terms

The proceeds from the convertible notes will primarily support ongoing working capital needs (A$637,200), corporate finance advisory fees to GC Partners Asia (A$138,000) related to securing three Offtake MOUs covering more than 100% of Phase 1 production, and capital raising fees to brokers (A$7,800).

The convertible notes carry a 10% annual coupon, accruing quarterly, with a maturity date set for 12 August 2025. Conversion terms include a 15% discount to the next capital raising price or the 10-day VWAP at maturity, with a floor price of A$0.015 per share. Additionally, subject to shareholder approval, noteholders will receive options exercisable at A$0.05 per share over three years, potentially adding approximately 18.27 million options to the capital structure.

Balancing Capital Needs and Shareholder Value

Executive Chairman Jurie Wessels emphasised the importance of the funding structure, stating it reflects a commitment to protecting shareholder value amid challenging market conditions. The convertible note approach offers a flexible mechanism to secure necessary capital without immediate equity dilution, which is particularly prudent given the current market environment.

With the Steelpoortdrift Vanadium Project boasting a substantial mineral resource and ore reserve base, the company’s ability to attract strategic partners will be critical to unlocking the project’s full potential. The convertible note funding is a tactical step that supports this broader strategic objective.