Underwriting Deal Shields Broken Hill Mines Amid Market and Regulatory Risks
Broken Hill Mines Limited has locked in a binding underwriting agreement for its BHMO Options, aiming to raise approximately A$7.5 million to accelerate drilling and development at its Broken Hill projects.
- Binding underwriting agreement for 9.37 million BHMO Options
- Expected capital raise of ~A$7.5 million before costs
- Underwriters Blue Ocean Equites and CPS Capital Group involved
- Funds to support Rasp and Pinnacles Mines development
- Shares issued without shareholder approval under ASX rules
Underwriting Agreement Secures Capital
Broken Hill Mines Limited (ASX – BHM) has announced a significant step in its capital raising strategy by entering into a binding underwriting agreement for all 9,368,916 BHMO Options currently on issue. These options, which carry a strike price of $0.80 and expire on 12 December 2025, are legacy instruments from Coolabah Metals Limited’s 2022 IPO, now under Broken Hill Mines following a reverse takeover earlier this year.
The underwriting arrangement guarantees that any options not exercised by holders before expiry will be taken up by the underwriters, Blue Ocean Equites Pty Ltd and CPS Capital Group Ltd. This ensures Broken Hill Mines will raise approximately A$7.5 million before costs, providing a solid financial foundation for the company’s next phase of growth.
Strategic Use of Funds
The capital raised through this underwriting, combined with a recently announced US$25 million Silver-Lead Concentrate Offtake Financing, positions Broken Hill Mines strongly to accelerate exploration and mine development activities at its flagship Rasp and Pinnacles Mines located in the Broken Hill region. These projects are central to the company’s strategy to expand its base metals footprint and enhance production capabilities.
Importantly, the shares to be issued under this agreement will be done so 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 streamlined capital raising process, allowing Broken Hill Mines to move swiftly in deploying funds.
Risk Mitigation and Market Confidence
The underwriting agreement includes standard termination events designed to protect the underwriters from material adverse changes, regulatory investigations, or market disruptions. These provisions reflect a cautious approach amid ongoing market uncertainties and ensure that the underwriting commitment remains robust only under stable conditions.
For investors, this move signals confidence from institutional underwriters in Broken Hill Mines’ prospects and the viability of its development plans. It also mitigates dilution risk by ensuring that unexercised options will still convert into capital for the company, rather than lapsing unexercised.
Looking Ahead
As the December expiry date approaches, the key focus will be on the rate at which option holders exercise their rights and the company’s ability to execute its accelerated development plans. The combination of this capital raise and the recent offtake financing could mark a turning point for Broken Hill Mines, potentially unlocking value through enhanced operational momentum.
Bottom Line?
Broken Hill Mines’ underwriting deal secures vital funding, setting the stage for a pivotal growth phase in Broken Hill.
Questions in the middle?
- Will option holders exercise their rights ahead of expiry or rely on underwriters?
- How will the company prioritize spending between Rasp and Pinnacles Mines?
- Could termination events in the underwriting agreement impact the capital raise completion?
