Azure Minerals comes clean over equity raising plans

Azure Minerals’ move to tell the market last week it was bid for by SQM came before its latest raise, where it has secured $120m. Picture: iStock

Azure Minerals is raising $120m through a placement at $2.40 per share, less than a week after dismissing speculation that a raise by the lithium producer was imminent.

The company will also lok to secure up to $10m through a Share Purchase Plan.

DataRoom reported last week that there had been suggestions in the market Azure Minerals was looking for between $70m to $120m, and that Azure was about to tap the market any day.

But Azure told DataRoom last week that no equity raising was about to unfold and that the share price would need to be far higher before such a move would be considered.

Azure Minerals shares closed on Friday at $2.74 after it told the market earlier in the week that it had received a buyout proposal from SQM at $2.31 per share, sending the stock price soaring 7.6 per cent on the news.

The raise through Barrenjoey and Canaccord is a 12.4 per cent discount to its last close.

SQM’s bid was first reported by this column.

As earlier reported by DataRoom, the confirmation of a $901m buyout proposal from SQM last month was taken as a cleansing statement before the raise was announced.

Sources believe that the group, which rebuffed a $901m buyout approach from SQM last month, could be in search of additional funds to pay for future development, given it only had $17.5m of cash on its balance sheet at the end of June.

SQM, or Sociedad Quimica y Minera de Chile as it is known, is also a major shareholder of Azure, holding 19.98 per cent of the stock and is participating in the raise, buying new shares and taking its holding to 19.99 per cent, along with the Creasy group, the holder of 13.37 per cent.

Azure owns 60 per cent of the Andover Lithium Project in the West Pilbara region of Western Australia, which has signalled promising lithium results, with the Creasy Group owning the remainder.

Azure will use $66m from the raise for exploration at Andover and $14m on studies at Andover, with $58m accounting for corporate, working capital and offer costs.

It takes its total capital to $137.5m.

The Adover deposit discovered lithium and nickel, but lithium is now the company’s focus.

SQM is separately in a joint venture with Wesfarmers in the Mt Holland lithium project, with the mine and associated refinery at Kwinana to produce 50,000 tonnes of lithium hydroxide.

As previously announced, Azure is targeting a maiden Mineral Resource Estimate for Andover in the first quarter of 2024.

Azure’s exploration target released this month is an estimated potential mineralisation of 100 to 240 million tonnes at 1 to 1.5 per cent lithium pushed the group’s share price close to $3.