- £8mn placing of new shares and warrants
- £0.5mn open offer on same terms
CleanTech Lithium (CTL:22p), a lithium company in Chile, has announced a £8.5mn fundraising to progress additional technical work at its flagship Laguna Verde project and finance drilling at Francisco Basin.
A total of 36.4mn placing shares will be issued at 22p each representing 25 per cent of the company’s enlarged share capital. Investors will also receive one warrant for every two new shares purchased in the placing. They have an exercise price of 33p and three-year term. Regal Funds, which is currently interested in more than 10 per cent of the shares in issue, is subscribing for £1.2mn of the placing shares to maintain its current interest. Other shareholders are entitled to participate in a one-for-45 open offer on the same terms as the placing to raise £0.5mn.
Around £2.5mn of the new funds will be used to drill and test five new wells at Laguna Verde. The aim is to increase the JORC resource base, move the resource from inferred to the measured & indicated categories and provide data from the re-injection well. A further £1mn will be spent on completing the Prefeasibility Study (PFS) in the first quarter of 2024 and take the preferred option into the Definitive Feasibility Study (DFS) for completion by end 2024.
In addition, £1.1mn has been earmarked for the Direct Lithium Extraction (DLE) pilot plant to test and optimise the DLE process. It will help inform the PFS and produce lithium carbonate which can be sent to potential strategic partners for testing and product qualification.
CleanTech is also progressing a dual listing of the shares on the Australian Stock Exchange and aims to complete the listing in March or April 2024. The balance of the proceeds will be used for general working capital purposes.
Strategically, the fundraise makes sense, although new investors have driven a hard bargain with the placing price less than half the price at the start of last month when CleanTech completed the scoping study at Francisco Basin (‘This company has electrifying potential’, 2 October 2023). The lithium carbonate price has fallen 20 per cent in the same seven-week period, and more than 70 per cent in 2023, the primary reason for the weakness in the company’s share price.
That said, with the placing fully subscribed, investors can turn their attention to the operational progress CleanTech is making on its two major lithium projects. They will be still hugely profitable at the current depressed lithium price and warrant a valuation for CleanTech several times its depressed £23mn market capitalisation. I would take up your allocations in the open offer. Buy.
■ Simon Thompson's latest book Successful Stock Picking Strategies and his previous book Stock Picking for Profit can be purchased online at www.ypdbooks.com at £16.95 each plus P&P of £4.95, or £25 plus P&P of £5.75 for both books.
