The AIM-listed metals exploration and development company said it will issue 175,000,000 new ordinary shares at a price of 0.40p each. Power Metal shares were steady at 0.38p each in afternoon trading on Tuesday.
The group noted that each placing and subscription share will have an attaching warrant exercisable at 0.70p per new ordinary share for a period of two years.
It pointed out that the company’s CEO, Paul Johnson and chairman, Andrew Bell have subscribed for £25,000 each in the financing on the same terms as other investors.
Of the funds raised, Power Metal said £400,000 is allocated to enable the company to exercise – should it decide to do so – the earn-in to the Molopo Farms Complex project in Botswana.
The company added that the balance of the placing proceeds will be mainly applied to the advancement of its other African power metal interests and work undertaken in relation to the Alamo Project, which is currently under due diligence.
In a statement, Paul Johnson commented: “The Financing raised today, together with existing working capital, provides a considerable cash runway for the Company.
“Importantly, the Financing was undertaken at the market offer price for ordinary shares of the Company, protecting our existing shareholders from the now common practice of raising funds at a discount, something we are keen to avoid.”
He added: “Importantly £400,000 (circa US$500,000) of this money is allocated to provide funding to allow the Company to exercise its earn-in option over the Molopo Farms Complex project in Botswana or make another strategic investment, with the funds to be applied to drilling of key targets for nickel-copper-PGMs, planned to commence early in the new year.
“Further work is also planned across the Company’s other interests in Cameroon, the DRC and Tanzania, with the underlying objective being the discovery of large-scale metal deposits.
“We will also be continuing with due diligence in respect of the Alamo Project in Arizona, to assess the project, which already shows evidence of extensive gold nuggets at surface and the potential for a large mineralised gold system.”
Signs of a recovery in junior resources
Johnson concluded: “The junior resource sector is showing strong signs of a recovery and we believe this is likely to continue. POW remains well financed, with access to sensibly priced working capital and with a proactive exploration approach across its interests.”
The company also said it intends to appoint an additional non-executive director to the board, subject to the completion of due diligence.
And added that First Equity Limited, who exclusively raised funds in respect of the financing are to be appointed as joint brokers to the company with effect from admission of the placing and subscription shares to trading on AIM.