Underwriting Risks Loom as Premier1 Lithium Launches Strategic Capital Raise

Capital Raise Details

Premier1 Lithium Limited, soon to be renamed Erebus Resources Limited pending shareholder approval, has launched a renounceable pro-rata entitlement offer to raise approximately $1.84 million before costs. Eligible shareholders are invited to subscribe for one new share for every share held as of the record date, priced at $0.005 each. Additionally, for every two new shares subscribed, shareholders will receive one free attaching quoted option exercisable at $0.015 each, expiring three years from issue.

The offer is partially underwritten by Mahe Capital Pty Ltd for up to $1 million, providing a degree of certainty to the capital raise. The underwriting agreement includes standard termination clauses and requires shareholder approval for the issue of underwriter options as partial consideration for underwriting services.

Strategic Use of Funds

The proceeds from the entitlement offer are earmarked primarily for advancing exploration activities at the company’s Yalgoo and Abbotts North projects in Western Australia. This includes heritage surveys, geophysical work, and drilling programs aimed at expanding and better defining mineral resources. A portion of the funds will also support general working capital and cover the costs associated with the offer itself.

This capital injection aligns with Premier1 Lithium’s strategic pivot away from a sole focus on lithium exploration, as reflected in the proposed rebranding to Erebus Resources Limited. The name change, subject to approval at the 2025 annual general meeting, signals a broader resource exploration and development ambition.

Shareholder Participation and Dilution

The entitlement offer is renounceable, allowing shareholders to sell or transfer their rights on the ASX. Shareholders who do not participate risk dilution of their holdings, with examples in the prospectus illustrating potential reductions in ownership percentages. The company has emphasized that no single shareholder or investor will exceed 20% voting power as a result of the offer, maintaining a balanced control structure.

Eligible shareholders may also apply for additional shares beyond their entitlement through the shortfall offer, which remains open for up to three months after the closing date. The allocation of shortfall securities is at the discretion of the board and underwriter.

Risks and Market Considerations

Premier1 Lithium’s prospectus outlines a comprehensive set of risks typical for mineral exploration companies, including exploration and development risks, funding uncertainties, operational challenges, and market volatility. The speculative nature of the investment is clearly stated, with no guarantee of dividends or share price appreciation. The underwriting agreement contains multiple termination events that could impact the success of the capital raise.

The quoted options issued with the new shares carry an exercise price above the current share price, which may affect their value and likelihood of exercise. The company will seek ASX quotation for these options, but there is no assurance that an active market will develop.

Next Steps for Investors

The entitlement offer opens on 23 October 2025 and is scheduled to close on 30 October 2025, with new securities expected to commence trading on 7 November 2025. Shareholders are encouraged to carefully review the prospectus and consider their participation in light of the company’s strategic direction and risk profile.