ASM’s $3M Share Plan Risks Dilution Amid Uncertain Market Reception

ASM’s Capital Raise Initiative

Australian Strategic Materials Limited (ASX – ASM) has launched a Share Purchase Plan (SPP) aimed at raising approximately A$3 million before costs. The offer, which opens on 19 June 2025 and closes on 17 July 2025, invites eligible shareholders in Australia and New Zealand to purchase new shares at a 20% discount to the volume-weighted average market price (VWAP) over the five trading days prior to the issue date.

This move follows ASM’s announcement on 16 June 2025 and is underwritten by Canaccord Genuity (Australia) Limited, providing a degree of certainty around the targeted capital raise. The underwriting agreement includes sub-underwriting arrangements, ensuring the full amount is secured subject to regulatory limits.

Offer Details and Shareholder Participation

Eligible shareholders, defined as those registered by 5 – 00 pm AWST on 13 June 2025 with addresses in Australia or New Zealand (excluding US residents), may apply for up to A$30,000 worth of new shares without brokerage fees. The issue price will be set at a 20% discount to the VWAP, which was approximately A$0.65 leading up to the announcement, although the exact price will only be confirmed after the offer closes.

The company reserves the right to scale back applications or accept oversubscriptions, with the final number of shares issued depending on the issue price and total demand. New shares will rank equally with existing shares, carrying the same voting and dividend rights.

Potential Follow-up Placement and Board Participation

Following the SPP, ASM and Canaccord Genuity may undertake a top-up placement of up to A$2 million to sophisticated and professional investors, subject to shareholder approval and available placement capacity. Notably, ASM’s Chairman Ian Gandel, who holds a significant 19.16% voting power, may participate in this placement, subject to statutory limits and shareholder approval.

Directors of ASM are also eligible to participate in the SPP on the same terms as other shareholders, reflecting confidence in the company’s prospects.

Market and Regulatory Considerations

The SPP is structured in compliance with ASIC Corporations Instrument 2019/547, allowing the offer to proceed without a prospectus. However, the company cautions shareholders about the speculative nature of the investment and the risk of share price fluctuations between the offer announcement and the issue date. The company also highlights that the offer excludes shareholders in the United States and other jurisdictions outside Australia and New Zealand due to regulatory restrictions.

ASM’s board emphasizes the importance of shareholders seeking independent financial advice before participating and notes that the capital raising is not expected to materially affect control of the company.

Next Steps for Shareholders

Eligible shareholders can apply via BPAY or electronic funds transfer, with personalised application forms available through the company’s share registry portal. The new shares are expected to be issued on 24 July 2025 and commence trading on the ASX shortly thereafter.

As the company navigates this capital raising, investors will be watching closely for subscription levels, any scale back announcements, and the potential follow-up placement, all of which will shape ASM’s financial flexibility and market positioning in the months ahead.