ENRG Elements’ Entitlement Offer Raises Dilution and Political Risk Questions

Entitlement Offer Details and Structure

ENRG Elements Limited (ASX – EEL), a mining exploration company, has launched a renounceable entitlement offer to raise up to approximately A$1.63 million. The offer comprises up to 1,626,889,326 new fully paid ordinary shares priced at A$0.001 each, with one free attaching option granted for every two new shares subscribed. These options carry an exercise price of A$0.002 and expire four years from the date of issue.

The entitlement offer is structured on a one-for-two basis, allowing eligible shareholders to subscribe for one new share for every two shares held as of the record date. The offer is renounceable, meaning shareholders can trade their entitlements on the ASX between 29 September and 10 October 2025. Any entitlements not taken up or traded will lapse and form part of a shortfall offer.

Underwriting and Director Participation

Mahe Capital Pty Limited acts as the lead manager and partial underwriter, committing to underwrite up to A$1 million of the offer. Additionally, ENRG Elements’ Non-Executive Chairman, Mr Jiandong He, has agreed to sub-underwrite A$240,000 and intends to fully participate in the entitlement offer, subscribing for his full entitlement of 245 million new shares and 122.5 million attaching options. This participation signals confidence from management in the company’s prospects.

Use of Funds and Strategic Outlook

The funds raised will be directed primarily towards advancing exploration activities on existing projects, generating new projects, and acquiring new assets. Specifically, A$100,000 is earmarked for exploration on current projects, A$100,000 for project generation, and A$500,000 for new project acquisition and exploration. Corporate costs and working capital will consume the remaining funds, with an allocation of approximately A$650,000 and A$125,000 respectively.

ENRG Elements operates in jurisdictions including Niger and Botswana, with ongoing monitoring of geopolitical risks, particularly following the 2023 coup in Niger. The company acknowledges these risks and has adjusted operations accordingly. The capital raise is intended to provide financial flexibility to navigate these challenges while pursuing growth opportunities.

Risks and Investor Considerations

The company’s prospectus highlights a range of risks, including political instability, environmental liabilities, exploration uncertainties, and future capital requirements. The speculative nature of the investment is emphasized, with no guarantee of dividends or capital appreciation. Shareholders who do not participate in the offer will face dilution, as the share count could increase by approximately 50% if the entitlement offer is fully subscribed.

Importantly, the offer is structured to prevent any shareholder from increasing voting power above 20%, mitigating potential control shifts. The new shares and options will rank equally with existing securities, and the company will seek official quotation of the new securities on the ASX.

Timetable and Participation

The entitlement offer opens on 3 October 2025 and closes at 5 – 00pm AWST on 17 October 2025, with allotment and quotation expected by late October. Eligible shareholders in Australia, New Zealand, and the People’s Republic of China may participate. The offer excludes shareholders outside these jurisdictions due to regulatory and logistical constraints.

Shareholders can accept all, part, or none of their entitlement, trade their entitlements on ASX, or apply for additional shortfall securities subject to board discretion. Payments can be made via BPAY or EFT, with no brokerage or stamp duty payable on acceptance.