Gold and lithium explorer Firefinch Ltd (ASX: FFX) has successfully completed a $100m institutional placement.
The placement will see Firefinch issue new shares at $0.67. This issue price represents a 11.3% discount to the last closing price on 8 December 2021.
Settlement will occur on 17 December 2021.
The new shares will be allotted and commence trading on 20 December 2021.
Firefinch dipped -9.4% lower upon opening today, with retail investors driving the price down to closely match the placement’s 11.3% discount.
However, the company has since recovered intraday, and was -3.31% lower an hour out from the close.
Use of proceeds
Firefinch will use proceeds from the capital raise to enable a two-pronged growth strategy:
The company plans to rapidly increase gold production at the mali-based Morila Project to over 100,000 ounces of gold in 2022 and more than 200,000 ounces in 2024.
The company also plans to fast-track the development of the Goulamina project, one of the world's largest undeveloped high quality spodumene deposits also based in Mali.
Recently confirmed as being one of the world's largest lithium development projects, Firefinch plans to spin off this project into a separate ASX listing to better realise the project’s value.
The majority of the funds will be used for the Morila gold project, as the company already has in place a deal with China-based Jiangxi Ganfeng Lithium to cover the Goulamina project.
Along with providing certainty for the company’s growth, today’s placement will help the company remove reliance on debt funding.
Goulamina lithium project to spin off in 2022
Firefinch plans to demerge the Goulamina lithium project into a new ASX-listed company in 2022.
This spin off will be a joint venture with Chinese company Jiangxi Ganfeng Lithium, who will contribute US$130m in cash and provide up to US$64 million in debt.
Post spin off, Firefinch will own 50% stake in the project.
Managing director comments on the announcement
Following the demerger in 2022, managing director Michael Anderson has indicated that Goulamina will begin production in 2023.
“2021 has been a transformational year for the Company,” says Managing Director Michael Anderson.
“This funding provides a tremendous foundation for further growth as we enter 2022,"Anderson said.
"We are now well funded to deliver on our strategic vision of becoming a West African gold producer of scale, as well as developing the next major lithium project to enter production, ahead of our Goulamina demerger in the new year.”
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