Coolabah Metals Limited is set to raise $15-20 million through a public offer to acquire Broken Hill Mines Pty Ltd, aiming to restart operations at the Rasp and Pinnacles Mines in NSW. The move marks a strategic shift towards production, subject to shareholder and ASX approvals.
- Public offer to raise $15-20 million at $0.35 per share
- Acquisition of 100% of Broken Hill Mines Pty Ltd (BHM)
- Focus on operating and developing Rasp and Pinnacles Mines
- JORC-compliant mineral resources – 10.1 Mt at 9.4% ZnEq (Rasp), 6.0 Mt at 10.9% ZnEq (Pinnacles)
- Material uncertainty regarding going concern; funds expected to cover 24 months
Strategic Acquisition and Capital Raise
Coolabah Metals Limited, soon to be renamed Broken Hill Mines Limited, has launched a significant capital raising initiative aiming to secure between $15 million and $20 million through a public offer priced at 35 cents per share. This capital raise is designed to fund the acquisition of 100% of Broken Hill Mines Pty Ltd (BHM), a company that owns the operating Rasp Mine and holds an economic interest in the Pinnacles Mine, both located in the renowned Broken Hill mining district of New South Wales.
The acquisition and capital raising are contingent upon shareholder approval at a general meeting scheduled for 20 June 2025, as well as the company’s successful re-compliance with ASX listing rules, which will enable the reinstatement of its securities to official quotation. The transaction represents a pivotal shift for Coolabah Metals, transitioning from an exploration-focused entity to a producing miner with a clear operational focus.
Operational Focus and Resource Base
Post-acquisition, the company plans to concentrate on the continued operation and development of the Rasp and Pinnacles Mines. The Rasp Mine boasts a JORC-compliant mineral resource estimate of approximately 10.1 million tonnes at 9.4% zinc equivalent, encompassing zinc, lead, and silver. Meanwhile, the Pinnacles Mine holds a combined resource of 6.0 million tonnes at 10.9% zinc equivalent, with an additional exploration target of 6 to 15 million tonnes, indicating substantial potential for resource growth.
These assets are supported by a modern processing plant at Rasp, designed for a throughput of 750,000 tonnes per annum, currently operating at approximately 50% capacity. The company aims to optimize plant utilization by integrating ore feed from Pinnacles, which is currently on care and maintenance but has promising high-grade mineralization.
Financial Position and Risks
Coolabah Metals and BHM are currently loss-making entities, with their recent financial reports highlighting material uncertainties related to going concern. However, the board expresses confidence that the funds raised through the public offer, combined with existing cash reserves and potential offtake financing, will provide sufficient working capital for at least the next 24 months.
Investors should be mindful of several risks detailed in the prospectus, including the possibility that the company may not meet ASX requirements for re-admission, dilution risks due to the significant increase in shares on issue, commodity price volatility, operational challenges inherent in mining, and regulatory and environmental compliance risks. Notably, a substantial portion of shares will be subject to escrow restrictions for up to 24 months post-reinstatement, potentially impacting liquidity.
Governance and Management Changes
The acquisition will also bring changes to the company’s board and management team. Patrick Walta, a seasoned mining executive with a successful track record in zinc mine development and operations, will assume the role of Executive Chair. Other new appointments include experienced non-executive directors and a new Chief Financial Officer, reflecting a strengthened leadership team aligned with the company’s new operational focus.
Comprehensive independent technical and legal assessments accompany the prospectus, providing detailed evaluations of the mineral assets, tenure, environmental obligations, and corporate governance frameworks. The company also maintains robust environmental, social, and governance (ESG) policies to support sustainable mining practices and community engagement.
Looking Ahead
With the capital raise underway and the acquisition pending approvals, Coolabah Metals is positioning itself to become a significant player in the Broken Hill mining landscape. The company’s strategy to leverage existing infrastructure, expand mineral resources, and optimize production capacity could unlock substantial value for shareholders, provided the outlined risks are managed effectively.
Bottom Line?
Coolabah’s transformation into a producing miner hinges on successful capital raising and ASX re-compliance, with operational execution and market conditions set to define its near-term trajectory.
Questions in the middle?
- Will Coolabah Metals secure the minimum $15 million subscription to proceed with the acquisition?
- How will the company manage the liquidity challenges posed by extensive escrowed shares?
- What are the prospects and timelines for converting Pinnacles’ exploration target into a mineral resource?