Bubalus Resources has secured firm commitments for a $3.0 million placement to fund the proposed Skyline Copper-Gold Project acquisition, initial exploration and working capital. The transaction remains conditional, with a substantial portion of the placement and the acquisition still requiring shareholder approval.
- $3.0 million placement at $0.07 per share
- 42,857,143 new shares, representing a 15.66% discount
- $320,000 in proposed director subscriptions, subject to approval
- Funding earmarked for Skyline acquisition and initial exploration
- CopperCorp expected to hold 19.95% after completion
Placement clears funding hurdle for Skyline
Bubalus Resources Limited (ASX:BUS) has secured firm commitments for a $3.0 million placement, giving its proposed Skyline Copper-Gold Project acquisition a defined funding package while adding 42,857,143 shares to the register at $0.07 each.
The raise comes shortly after the company outlined its plan to acquire the 494-square-kilometre Skyline project in western Tasmania, located about 10 kilometres from Mt Lyell, in the Skyline acquisition plan earlier this month. Bubalus says the new funds, combined with existing cash reserves, will cover the cash consideration for the acquisition, an initial exploration program and general working capital.
New shares come at a 15.66% discount
The issue price represents a 15.66% discount to Bubalus' last traded price of $0.083 on 23 October. The placement was supported by existing and new sophisticated and institutional investors, according to the company, although the announcement does not identify the participating investors.
Proposed subscriptions totalling $320,000 from current and proposed directors are included in the raise, but those commitments are not yet unconditional. They require shareholder approval at a general meeting expected in December, alongside approval for 25,385,141 placement shares that cannot be issued under the company's existing placement capacities.
Skyline ownership and transaction conditions remain unresolved
The first tranche comprises 17,472,002 shares that Bubalus intends to issue under its ASX Listing Rules 7.1 and 7.1A capacities, with settlement expected on 4 November. The second tranche will depend on shareholder approval, leaving a material part of the announced capital raising subject to a vote.
Bubalus also proposes to issue 29,181,759 consideration shares to complete the Skyline acquisition, including an additional 610,330 shares under the top-up mechanism in the Tenement Sale Agreement. On the proposed post-completion capital structure, the CopperCorp group is expected to hold about 19.95% of Bubalus.
That structure is not yet locked in. Completion of the acquisition depends on the capital raising, approvals from Bubalus and CopperCorp shareholders, acceptance from the TSX Venture Exchange and the transfer of the project licences to a Bubalus subsidiary. The company has not disclosed the cash consideration or detailed budget for the initial exploration program in this announcement, leaving the next round of transaction and work-program disclosures important to the investment case.
Bottom Line?
The placement gives Skyline a clearer path to completion, but investors still face approval risk, a sizeable new share issue and an exploration budget yet to be disclosed.
Questions in the middle?
- Will shareholders approve the second placement tranche and the proposed director subscriptions in December?
- What cash consideration and first-year exploration budget will Bubalus ultimately commit to Skyline?
- Will the TSX Venture Exchange and licence-transfer conditions be cleared on the timetable required for completion?