Mont Royal to Issue Up to 50M Shares at $0.20 in $10M Capital Raise

Capital Raise and Merger Overview

Mont Royal Resources Ltd (ASX – MRZ) has lodged a replacement prospectus aiming to raise a minimum of A$8 million and up to A$10 million through the issue of 40 to 50 million new fully paid ordinary shares at A$0.20 each. This capital raising replaces an earlier prospectus and is a critical step in supporting the company's proposed merger with Commerce Resources Corp, a Canadian junior mineral resource company.

The merger will create a merged entity focused on critical minerals exploration and development in Quebec, Canada, with a strong emphasis on rare earth elements (REEs), fluorspar, lithium, copper, and gold. The combined company will hold key assets including the Ashram Rare Earth and Fluorspar Project and the Northern Lights Project, which is prospective for lithium and base metals.

Strategic Projects and Development Plans

The Ashram Project, wholly owned by Commerce Resources, is a pre-development stage deposit with a JORC-compliant mineral resource estimate of 204 million tonnes at approximately 1.9% total rare earth oxides and 4.9% fluorspar. The project is notable for its simple mineralogy and promising metallurgical testwork, indicating the potential for high-grade rare earth concentrates and a valuable fluorspar by-product.

Mont Royal’s Northern Lights Project, where it holds a 75% interest, covers a 456.3 square kilometre tenement package in the James Bay region. It is prospective for lithium, copper, gold, and other base metals, with recent exploration programs confirming spodumene-bearing pegmatites and volcanogenic massive sulfide (VMS) style mineralisation.

Capital Structure and Shareholder Impact

The transaction involves a share consolidation on a 0.2195-for-1 basis, with the issuance of consideration shares, options, and performance rights to Commerce shareholders and key management personnel. Post-merger, existing Mont Royal shareholders will hold approximately 9.76% to 10.3% of the merged company’s issued capital, with Commerce shareholders holding the majority stake.

The prospectus details the dilutionary impact on existing shareholders, with the public offer investors expected to hold around 22% to 26% of the company post-transaction. The company also plans to list on the TSX Venture Exchange, providing dual listing benefits and potentially enhanced liquidity.

Financial Position and Use of Funds

Mont Royal’s audited financial statements for the year ended 30 June 2025 include a material uncertainty regarding going concern, reflecting the need for additional funding. The directors believe that completion of the capital raise will provide sufficient working capital for the next 24 months, supporting the advancement of the Ashram Project through scoping and pre-feasibility studies, environmental baseline studies, and ongoing exploration at Northern Lights.

The Independent Technical Assessment Report by SRK Consulting confirms the quality and robustness of the mineral resource estimates and endorses the proposed use of funds. The report highlights the advanced stage of the Ashram Project and the promising exploration potential of Northern Lights.

Governance and Risk Considerations

The merger will bring changes to the board and management, with new appointments including a proposed chairman and managing director with extensive experience in critical minerals and mining projects. The prospectus provides detailed risk disclosures, including regulatory, environmental, market, and operational risks inherent in mineral exploration and development.

Shareholder approval is required for the transaction and capital raise, with a general meeting scheduled for 10 October 2025. The offer is conditional on ASX re-admission and other regulatory consents.