Lithium prices might be in the doldrums compared to its 2022 highs, but that hasn’t stopped Winsome Resources (ASX:WR1) from raising $25M to kick off production.
The company is offering shares at 85cps – but only $11.8M of the total raising will be priced at that level.
“Canadian flow through financing provisions” will net Winsome the remaining $13.2M, except that will be priced at $1.275/ps – a 32% premium to Winsome’s closing price on Friday.
Between both tranches, the company has received commitments for the total amount sought at “a weighted average price of approximately $1.00 per share.”
Regardless, shares fell -14% in the second hour of Monday trades to 83cps, a touch below the 85cps placement price.
Winsome MD Chris Evans explained the difference between the Canada-sourced funding and the placement component.
“The flow through financing provisions under Canadian tax law mean we are again able to raise funds at a significant premium to the current share price and therefore at a lower cost of capital,” Evans said.
“The additional funds put Winsome in an enviable position, with one of the largest and growing lithium deposits in North America.”
While the company described the raise as putting it on the “pathway to production,” the $25M was slated as being fundamental to project studies for the Adina Lithium and Renard Project, to be completed before September.
Winsome is ultimately looking at buying Renard. Adina, meanwhile, is its flagship – boasting a resource of 77.9M tonnes of ore at 1.15% lithium. But the $25M will also go towards expanding that resource through drilling.
“Winsome is firmly committed to developing Adina and is pleased to see the high level of interest from high conviction investors who believe in … integrating into the North American EV supply chain,” Evans added.
Lithium prices remain down nearly -70% YoY. Metals markets are, on the whole – notwithstanding lithium oversupply – heavily linked to Chinese performance; a country with an economy back in deflation.
If you want proof of the impact that’s having, look at copper – while in undersupply – has nonetheless fallen nearly -12% in the last month as traders question how robust demand for the electrification metal may be.
WR1 last traded at 83cps.