Pilbara Minerals clinches funding for tantalum production in Western Australia
Pilbara Minerals (ASX: PLS) has successfully raised $1.5 million through a convertible
note issue to sophisticated investors, underpinning plans to progress
its flagship Tabba Tabba Tantalum Project in Western Australia to
production this year.
The funds raised will be used to complete
the acquisition of a 50% interest in Tabba Tabba, and for the ongoing
approval process currently being progressed by joint venture partner
Nagrom Mining.
Last month Pilbara Minerals completed a Feasibility Study on the development of the project, which
is located 84 kilometres by road from Port Hedland in Western Australia,
with the results demonstrating robust economics.
The Feasibility
Study defined an initial mine life of 19 months producing 365,000
pounds of tantalum pentoxide, within a minimum 5% concentrate,
delivering earnings before interest, tax, depreciation and amortisation
of $16 million.
First production is forecast for the third quarter this year.
The
funds raised will allow Pilbara to secure 50% of Nagrom Mining, which
holds the right to mine and process tantalum ore from Tabba Tabba, for
$1.2 million.
The initial $200,000 was paid to Nagrom in November
2013. Once Pilbara receives the funds from the convertible note issue,
Pilbara will pay $1 million to Nagrom, less the expenditure incurred
completing the Feasibility Study.
This amount will be paid to Nagrom in the form of $710,000 cash and 10 million Pilbara shares.
Drilling
for hydrology studies is expected to start at the end of March, which
is required for the water extraction permit, as well as a water
monitoring bore for the proposed Tailings Storage Facility.
The
capital raising comprises a placement of 1.5 million convertible notes
at an issue price of $1 each, with a duration of 18 months, and an
interest rate of 20% per annum.
Conversion price for the notes is at a 25% discount to the volume weighed average price of the previous 5 days trading.
Attaching
options at 100 Options for every $3 convertible notes will also be
issued. These will have an exercise price of $0.03, exercisable on or
before 3 years from issue date.
The Tabba Tabba Project, acquired
from global tantalum producer, Global Advanced Metals, will be
developed under a five-year mining and off-take agreement, providing
price and cash flow certainty.
Tantalum’s major use is in the
production of electronic components, especially for capacitors, with
additional use in nuclear power plants and airplanes.
The market
is boutique in size with around 1300 tonnes required each year, and
rapidly growing due to capacitor use in wireless and handheld devices.
Tabba Tabba could supply approximately 7% of the annual market consumption over two years.
