Underwriting and Litigation Risks Shadow Macarthur’s AUD 2 Million Capital Raise

Overview of the Offer

Macarthur Minerals Limited (ASX, MIO) has released a replacement prospectus for a pro-rata renounceable entitlement offer designed to raise approximately AUD 2 million. Eligible shareholders in Australia, New Zealand, and Canada are invited to subscribe for one new share for every two shares held at a price of AUD 0.02 per share. Additionally, shareholders will receive one free attaching option for every two shares subscribed, exercisable at AUD 0.03 and expiring two years from issue.

The offer is fully underwritten by Gold Valley Yilgarn Pty Ltd, ensuring the company secures the targeted funds to support its ongoing exploration and corporate activities.

Purpose and Use of Funds

The proceeds from the entitlement offer will be allocated primarily towards statutory tenement exploration expenditure at the Lake Giles Project, working capital and corporate administration costs, repayment of trade and other payables, and the reduction of a short-term loan facility. This capital injection is critical for Macarthur Minerals to maintain its tenement holdings in good standing and advance its strategic initiatives.

Offer Structure and Underwriting Details

The renounceable nature of the offer allows shareholders to trade or transfer their entitlements during the rights trading period, providing flexibility for investors who may not wish to participate fully. Any entitlements not taken up will form part of the shortfall, which the underwriter is obligated to subscribe for, subject to compliance with takeover provisions.

While the underwriting agreement caps the maximum securities to be issued at approximately 100 million new shares and 50 million options, the actual number issued will depend on shareholder uptake and shortfall allocations. The underwriter does not currently hold shares or options but may acquire a significant interest if required to subscribe for shortfall securities.

Regulatory and Market Updates

In a strategic move to focus on its primary listing, Macarthur Minerals has voluntarily delisted from the TSX Venture Exchange and OTC Market as of May 16, 2025. This decision aligns with the company’s investor base concentration in Australia and aims to enhance liquidity and market focus on the ASX.

The company also disclosed ongoing litigation risks related to overlapping tenement applications in Western Australia, which may affect project timelines but are being actively managed with legal counsel.

Risk Considerations

Investors are cautioned that the offer and the company’s projects carry inherent risks typical of exploration and development-stage mining companies. These include funding uncertainties beyond the next 12 months, operational challenges, regulatory approvals, market price volatility for iron ore, and potential impacts from ongoing litigation. The company’s financial statements note material uncertainty regarding going concern, underscoring the importance of successful capital raising.

Macarthur Minerals’ directors intend to participate fully in the offer, signaling confidence in the company’s prospects despite the speculative nature of the investment.