West Wits Issues 100M Options at $0.0185 to Settle $680K Loan Fees
West Wits Mining has issued over 100 million unlisted options to Absa Bank to settle loan fees, reflecting a deepening partnership and shared confidence in the Qala Shallows gold project.
- 100,386,000 unlisted options issued to Absa Bank in lieu of fees
- Options priced at $0.0185, expiring in five years matching loan tenor
- Transaction reflects Absa’s strategic endorsement of Qala Shallows project
- Equity settlement preserves West Wits’ cash during critical funding phase
- Absa’s early move signals strong confidence in West Wits’ growth prospects
Strategic Equity Swap with Senior Lender
West Wits Mining Limited (ASX, WWI) has taken a notable step in its financing strategy by issuing 100,386,000 unlisted options to Absa Bank Limited, one of South Africa’s leading commercial banks. This equity-based settlement replaces approximately AUD 680,000 in fees payable under a senior syndicated loan facility of around USD 50 million. The options carry an exercise price of $0.0185 and expire five years from issuance, aligning with the loan’s tenor.
This move is more than a simple fee settlement; it signals a strategic partnership between West Wits and Absa. By opting for equity exposure rather than cash fees, Absa demonstrates a strong vote of confidence in the Qala Shallows project, the initial phase of the broader Witwatersrand Basin Project (WBP), which aims to position West Wits as a mid-tier gold producer.
Early Confidence Amid Market Shifts
Absa’s decision to accept options was flagged as early as October 2024, when West Wits shares traded between 1.4 and 1.6 cents. This was well before the Facility’s credit committee approval in February 2025 and prior to the recent uplift in gold prices and West Wits’ share price, which now trades around 5 cents. The exercise price set at 1.85 cents reflects a 15% premium to the volume-weighted average price before credit approval, underscoring Absa’s willingness to forgo immediate cash returns in favor of long-term upside potential.
West Wits CEO Rudi Deysel highlighted this as a “strong vote of confidence” and a strategic alignment that preserves cash resources at a critical juncture. The equity settlement not only strengthens the financial foundation for the Qala Shallows project but also aligns the interests of lender and miner as development progresses.
Implications for West Wits and Investors
The issuance of these options impacts West Wits’ capital structure by potentially increasing the number of shares outstanding if exercised, which investors will watch closely. However, the move also reduces immediate cash outflows, allowing the company to focus funds on advancing its flagship gold project in the prolific Witwatersrand Basin, a region historically known for its vast gold reserves.
Absa’s involvement extends beyond financing; its proactive engagement and equity participation may open doors to further strategic support and credibility in the market. For West Wits, this partnership could be pivotal in navigating the complexities of project development and capital markets as it seeks to transition from exploration to production.
Looking ahead, the market will be attentive to how these options are exercised and whether Absa’s stake grows, as well as updates on the Qala Shallows project’s progress and the broader Witwatersrand Basin ambitions.
Bottom Line?
Absa’s equity-backed fee settlement marks a strategic milestone, setting the stage for West Wits’ next growth phase.
Questions in the middle?
- Will Absa exercise its options early, and how might that affect share dilution?
- How will West Wits balance cash preservation with capital needs for project development?
- What further strategic support might Absa provide beyond financing?
