Underwriting Deal Shields Matsa from Option Exercise Shortfall Risks

Matsa Resources Secures Capital Through Underwriting

Matsa Resources Limited has taken a strategic step to secure potential capital inflows by entering into an underwriting agreement with WACC Pty Ltd, trustee for The Flagship Fund. This agreement guarantees the exercise of up to 10 million unlisted options, each exercisable at 7 cents and expiring on 7 September 2025. The underwriting arrangement ensures that any unexercised options at expiry will be subscribed for by the underwriter, providing Matsa with a maximum of $700,000 in fresh funds.

Details and Terms of the Underwriting Agreement

The underwriting agreement is structured on standard commercial terms and includes a 6% fee payable to the underwriter on the amount underwritten, excluding GST. Importantly, the shares issued to satisfy any shortfall under the agreement will be issued under ASX Listing Rule 7.2 Exception 10, meaning they will not require shareholder approval nor impact the company’s placement capacity under Listing Rule 7.1. This facilitates a smooth capital raising process without diluting existing shareholder rights or complicating future capital management.

Risk Management and Termination Provisions

The agreement also outlines a comprehensive set of termination events that protect both parties. These include material defaults by Matsa, adverse changes in financial or operational conditions, insolvency events, and geopolitical risks such as escalations in Russia-Ukraine or Israel-Iran hostilities. Such provisions reflect prudent risk management in an uncertain global environment, ensuring that the underwriter can withdraw if significant negative developments occur.

Implications for Matsa’s Capital Structure

With 761.25 million shares currently on issue and a market capitalisation of approximately A$68.5 million, this underwriting deal represents a modest but meaningful capital injection. The exercise price of $0.07 compares to the recent share price of 9 cents, suggesting the options are in the money and likely to be exercised. The arrangement provides Matsa with financial flexibility to support its exploration and development activities without immediate shareholder dilution concerns.

Looking Ahead

As the 7 September expiry date approaches, market participants will be watching closely to see how many options are exercised voluntarily and how much of the shortfall the underwriter ultimately subscribes for. This underwriting agreement not only secures potential funding but also signals confidence from an institutional investor in Matsa’s prospects.