Kogi Iron (KFE), together with its wholly owned Nigerian subsidiary KCM Mining, is set to raise up to $10.3 million to advance the company’s Agbaja Iron and Steel Project in the Republic of Nigeria.
The Australia-based iron ore and steel developer is aspiring to produce a cast steel billet product for sale to fabricators of finished steel products.
The company is seeking to fund a feasibility study for Agbaja and bolster its general working capital.
Accordingly, the capital raise will comprise an institutional share placement to generate up to $6.5 million, as well as a non-renounceable rights issue to raise the remaining $3.8 million.
Under the multi-part placement, Kogi will issue fully paid ordinary shares to U.S.-based institutional investor Diversified Metals, priced at 3.4 cents each — representing a premium of roughly 48 per cent on the company’s closing price on April 23.
In an initial placement, following an anticipated shareholders meeting on June 11, KFE will issue $2.14 million in shares to the subscriber to raise up to $2 million.
Kogi will then have the opportunity to issue shares in two more placements to raise a further $2 million and $2.5 million.
Notably, the number of shares to be issued through the placement has not yet been determined.
Instead, KFE will arrive at this figure by applying the above purchase price to a subscription price prepaid by Diversified Metals, with the result further subject to a floor price of 1 cent.
Non-renounceable rights issue
Additionally, through its non-renounceable rights issue, KFE is set to issue around 211.4 million new shares to eligible shareholders, providing an opportunity to apply for one new share for every four already held.
The issue price of 1.8 cents represents a 21.7 per cent discount to the company’s closing market price on April 23, and a 17.4 per cent discount to the volume-weighted average price for the five trading days prior to close of trade on the same date.
KFE says it will provide full details of the rights issue in an offer memorandum, which it expects to lodge with the ASX on April 30.
On the market this morning, Kogi Iron shares are 13 per cent lower, trading at 2 cents at 11:41 am AEST.