Prospech Targets $1.6M via 2-for-7 Rights Issue at 1.5 Cents per Share
Prospech Limited has announced a 2-for-7 renounceable rights issue to raise up to $1.6 million, featuring attaching options exercisable at 4 cents. Directors are backing the raise, which will fund rare earth metallurgical work and exploration in Finland and Slovakia.
- 2-for-7 renounceable rights issue priced at 1.5 cents per share
- Attaching options exercisable at 4 cents with three-year term
- Directors committed to $170,000 participation
- Funds targeted at rare earth metallurgical programs and exploration
- Rights issue partially underwritten for $600,000 by Mahe Capital
Capital Raise Details
Prospech Limited has initiated a renounceable rights issue aiming to raise approximately $1.6 million by offering shareholders two new shares for every seven held, priced attractively at 1.5 cents per share. This represents a 32% discount to the recent 30-day volume weighted average price, signaling an effort to incentivize shareholder participation amid a competitive market environment.
In addition to the new shares, shareholders will receive one attaching option for every two new shares subscribed. These options carry an exercise price of 4 cents and a three-year term, with plans for them to be listed on the Australian Securities Exchange, potentially adding liquidity and value for investors willing to engage with the company’s longer-term prospects.
Director Support and Underwriting
Notably, all directors have committed to participate in the rights issue, collectively underwriting approximately $170,000 of the raise. This level of insider commitment often serves as a positive signal to the market, reflecting confidence in the company’s strategic direction and the value of its projects.
The rights issue is also partially underwritten for $600,000 by Mahe Capital Pty Ltd, the lead manager and underwriter. This arrangement provides a degree of certainty around the capital raise, mitigating some risk of under-subscription and ensuring the company secures a meaningful portion of the targeted funds.
Use of Funds and Strategic Outlook
Funds raised will be directed towards advancing Prospech’s rare earth metallurgical work programs and exploration activities in Finland and Slovakia. These projects are central to the company’s growth strategy, focusing on rare earth elements that are critical to emerging technologies and renewable energy sectors.
The chairman emphasized that this fundraising marks a significant step in the company’s value creation journey, underscoring management’s commitment to progressing these projects and delivering shareholder value. The inclusion of attaching options may also provide investors with upside potential should the company’s exploration efforts yield positive results.
Offer Timetable and Participation
The rights issue timetable is set to commence with rights trading starting on 3 September 2025, and the offer closing on 1 October 2025. Eligible shareholders in Australia and New Zealand will receive a prospectus and personalised entitlement acceptance form shortly after the record date, enabling them to participate or trade their rights.
Foreign shareholders outside these jurisdictions will not be eligible to participate directly, with arrangements in place to sell their rights and distribute net proceeds accordingly. The company has also clarified that no offer is being made in the United States, complying with relevant securities laws.
Bottom Line?
Prospech’s capital raise and attaching options set the stage for advancing key rare earth projects, but market response and subscription levels will be critical to watch.
Questions in the middle?
- Will the rights issue achieve full subscription beyond the underwriting commitment?
- How will the market price and liquidity of the new options evolve post-listing?
- What progress and results can investors expect from the funded metallurgical and exploration programs?
