How Ryzon’s $3.5M Deal with Xinhai Could Fast Track Nachu Graphite Production
Ryzon Materials has expanded its engineering contract with Xinhai to fast track production at its Nachu Graphite Project, alongside a $500,000 capital raising from Xinhai. The deal involves a $3.5 million contract largely settled through shares and options, pending shareholder approval.
- Expanded $3.5 million detailed engineering contract with Xinhai
- Staged approach to fast track initial production at 80,000 tonnes per annum
- 80% of engineering contract cost to be paid via shares and options issuance
- Xinhai commits $500,000 capital raising investment for working capital
- Shareholder approval for share and option issuance expected at November AGM
Expanded Engineering Agreement
Ryzon Materials Ltd (ASX – RYZ) has taken a significant step forward in developing its Nachu Graphite Project by signing an expanded detailed engineering design contract with Yantai Xinhai Mining Research & Design Co., Ltd. This new agreement builds on earlier work and introduces a staged approach aimed at fast-tracking production to an initial rate of 80,000 tonnes per annum.
The expanded scope covers comprehensive engineering deliverables, including detailed flow charts, plant configuration diagrams, equipment layouts, piping and tank schematics, and architectural designs for civil works. This level of detail is critical to ensuring the processing plant is optimally designed for efficient graphite production.
Innovative Payment Structure and Capital Raising
Valued at $3.5 million, the engineering contract will be predominantly settled through the issuance of shares and options, with 80% of the cost ($2.8 million) paid this way. Specifically, Ryzon plans to issue 66 million shares at $0.05 each, accompanied by 33 million free attaching options exercisable at the same price within three years. This approach helps preserve cash while aligning Xinhai’s interests with the project’s success.
In addition to the engineering contract, Xinhai has committed to a $500,000 placement in Ryzon to support working capital needs. The combined equity issuance is subject to shareholder approval, which Ryzon intends to seek at its upcoming Annual General Meeting in November 2025.
Strategic Partnership and Project Confidence
Xinhai’s Chairman, Yunlong Zhang, expressed strong confidence in the Nachu graphite’s quality and uniqueness, highlighting multiple site visits and ongoing detailed engineering efforts. This partnership not only brings technical expertise but also financial backing, reinforcing Ryzon’s position in the graphite mining sector.
Ryzon’s vertically integrated approach in the lithium-ion battery supply chain positions it well to capitalize on growing demand for electric mobility and renewable energy storage. The Nachu project’s advancement through this expanded engineering contract and capital raising marks a pivotal milestone in Ryzon’s growth trajectory.
Bottom Line?
With engineering momentum and fresh capital secured, Ryzon is poised to accelerate Nachu’s path to production, but shareholder approval and execution remain key hurdles ahead.
Questions in the middle?
- Will shareholders approve the significant share and option issuance at the November AGM?
- How will the staged production ramp-up impact project timelines and costs?
- What are the potential dilution effects on existing shareholders from this equity raising?
