Heavy Rare Earths Targets $728K via Entitlement Offer at 2.8 Cents per Share

Entitlement Offer Details and Capital Raise Structure

Heavy Rare Earths Limited (ASX:HRE) is pressing ahead with a modest capital raise targeting approximately $728,119 through a non-renounceable pro-rata entitlement offer. Eligible shareholders can subscribe for one new share at $0.028 for every eight shares held as of 24 August 2026, with the added sweetener of one free-attaching option for every two new shares subscribed. These options carry an exercise price of $0.06 and expire on 26 February 2028.

The offer is complemented by a parallel placement of up to 46.4 million shares at the same price, expected to raise $1.3 million, along with attaching placement options subject to shareholder approval at a general meeting scheduled for 30 September 2026. The lead manager, Cygnet Capital, also stands to receive 5 million options as partial fee consideration, also contingent on shareholder approval.

Use of Funds Focused on Exploration and Strategic Initiatives

Funds from the entitlement offer and placement are earmarked primarily for advancing Heavy Rare Earths’ exploration pipeline. This includes a strategic review of the Subron Heavy Rare Earths project, maiden drilling campaigns at the Prospect Hill tin project and the Radium Hill project, alongside ANSTO test work at Radium Hill. The company also allocates roughly 22% of the proceeds to general working capital and cover offer costs.

These initiatives align with recent developments where Heavy Rare Earths expanded its Subron project footprint by 268%, securing high-grade heavy rare earth oxide extensions, while also securing drilling approvals for its South Ridge tin prospect. The capital raise is thus positioned to underpin these exploration milestones and maintain operational momentum.

Shareholder Impact and Offer Mechanics

The entitlement offer is non-renounceable, meaning shareholders cannot trade their rights, and those who do not participate risk dilution. The company’s capital structure post-offer would see the total shares on issue rise to approximately 280 million, with over 41 million quoted options and 25 million performance rights outstanding, assuming full subscription and shareholder approvals.

Eligible shareholders who fully subscribe to their entitlement may apply for additional shares through a Top-Up Facility, capped at 50% of their entitlement, subject to board discretion and regulatory limits, including a 20% voting power threshold to prevent control shifts.

Risks Highlighted in the Prospectus

Heavy Rare Earths’ prospectus candidly outlines material risks, including a going concern uncertainty highlighted in the half-year financial report ending December 2025, where the company reported a net loss of $847,844 and operating cash outflows of $551,839. While the board believes current funds suffice for near-term commitments, the need for future funding remains a significant risk.

Exploration risks are prominent, reflecting the inherent uncertainty in mineral discovery and development, alongside regulatory, environmental, and permitting challenges typical in the mining sector. The company also flags dilution risks for shareholders and the conditional nature of parts of the capital raise on shareholder approvals.

Timetable and Next Steps

The offer opened on 27 August 2026 and is set to close on 25 September 2026, with shortfall securities available for up to three months thereafter. Securities issued under the offer are expected to commence trading on a normal settlement basis from 5 October 2026, following deferred settlement trading from 28 September.

The general meeting on 30 September will be a critical event for approving the tranche 2 placement shares, placement options, lead manager options, and board performance rights. Failure to secure approval could reduce the capital raised by approximately $432,000, potentially impacting planned exploration activities.