ASX-listed Nigerian steel hopeful Kogi Iron has undertaken a share placement to raise US$2.35 million progress the bankable feasibility study for its 100% owned Agbaja cast steel project in Nigeria.
Nigeria – The share placement, to an institutional investor, and various professional and sophisticated investors, is expected to cover corporate costs and general working capital including the tenement holding costs of the Agbaja project and Nigerian Community Development projects.
Communication is continuing with 28 potential investors to raise the balance of the estimated $10 million to be raised and Kogi Iron is aiming to have this in place by the first quarter in 2020.
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The structure of these cornerstone share placements will support activities for an equity growth path. Importantly, these funds will assist Kogi Iron to build and promote the international profile of its “Project of National Significance” as publicly recognized by the Government at Nigeria Mining Week, October 2019,” says Kogi Iron MD David Turvey.
Kogi Iron has entered into agreements to place 68 409 091 fully paid ordinary shares. Sorbie Capital, an institutional investor, has subscribed for 56 818 182 new ordinary shares at a price of $0.0352 per share for an aggregate consideration of $2 million including an initial lump sum of $300 000 payable to Kogi on execution of the agreements.
In addition, the company has entered into a sharing agreement with Sorbie, which allows the company to retain much of the economic interest in the Sorbie subscription shares. The sharing transaction will allow the company to secure the potential upside on 37 735 849 of the Sorbie subscription shares arising from news flow over the next 18 months. Kogi entered into a similar financing arrangement with Lanstead (a party which shares a founder with Sorbie) in 2014.
The balance of the placement (8 750 000 shares at 4 cents per share) will raise $0.35 million (before costs) and is to a variety of professional and sophisticated investors. The issue price represents a 19% discount to Kogi’s 20 day volume weighted average share price.
The structure of this placing is designed to provide Kogi iron with flexibility in continuing to advance the Agbaja project while maintaining a constant source of funds covering a portion of the company's short to medium term cash flow requirements.
A proposal to prepare the bankable feasibility study is expected in December 2019 and it is estimated that the study will take 12 months to finalise.