Power Minerals Faces Going Concern and Litigation Risks Amid Capital Raising

• Offer of four new options per five shares subscribed in $1.3M placement
• 12 million new options issued to joint lead managers as fees
• Options exercisable at $0.10, expiring December 2029
• Strategic acquisition of lithium projects and divestment of Santa Ines
• Detailed risk disclosures including going concern and litigation

Placement and Options Offer

Power Minerals Limited (ASX – PNN) has issued a prospectus dated 1 July 2025 detailing an offer of new options linked to a recent capital raising. The company raised A$1.3 million through a placement of 21.7 million shares at A$0.06 each, issued in two tranches with shareholder approval secured for the second tranche. As part of the offer, placement participants, including Managing Director Mena Habib, are entitled to receive four new options for every five shares subscribed. Additionally, 12 million new options will be issued to the joint lead managers, GBA Capital and CoPeak, as part of their fees.

Terms and Capital Structure Impact

The new options carry an exercise price of A$0.10 and expire on 31 December 2029. Upon exercise, shares issued will rank equally with existing shares. The issuance of these options does not raise immediate funds but provides potential future capital if exercised. Post-offer, the company’s capital structure will expand to approximately 144 million shares and nearly 118 million options outstanding, reflecting the dilution potential inherent in the offer.

Strategic Project Developments

Power Minerals is actively pursuing growth through strategic acquisitions and divestments. Notably, the company is advancing the acquisition of lithium-brine projects in Argentina from Ultra Lithium Inc., despite ongoing disputes related to outstanding loan repayments. Concurrently, it is divesting the Santa Ines Project in Argentina for A$1.5 million, a move aimed at streamlining its asset portfolio. The company is also exploring joint venture opportunities, including a potential collaboration with Watercycle Technologies Ltd to apply lithium recovery technologies at its Pular Project.

Financial Position and Risk Factors

The prospectus provides a pro-forma balance sheet showing improved net assets following the placement, with cash reserves increasing to approximately A$1.75 million. However, the company continues to face significant financial challenges, including a material uncertainty regarding its ability to continue as a going concern. The document outlines extensive risk factors, ranging from sovereign and regulatory risks in its operating jurisdictions of Australia, Argentina, and Brazil, to operational and environmental risks inherent in mineral exploration and development. Litigation risks are also highlighted, particularly concerning the unsettled loan with Ultra Lithium Inc.

Governance and Market Implications

The offer has been approved by shareholders, with directors and joint lead managers participating in the options issuance. Power Minerals intends to list the new options on the ASX, providing liquidity and market visibility. The company’s ongoing disclosure obligations ensure that investors will be kept informed of material developments. While the options offer provides a mechanism for future capital inflow, the company’s path forward remains contingent on successful project execution, resolution of outstanding disputes, and securing additional funding.

Bottom Line?

Power Minerals’ new options offer marks a pivotal step in its capital strategy, but investors should watch closely for progress on project milestones and financial stability.

Questions in the middle?

• Will Power Minerals successfully recover the outstanding loan from Ultra Lithium Inc.?
• How will the Santa Ines divestment and new acquisitions reshape the company’s asset portfolio?
• What are the prospects for exercising the new options and their impact on shareholder dilution?