Presuming a cornerstone investor cannot hold more than 20% of a company without a takeover offer, that would allow the Board to issue 67 million shares.
One scenario is to raise $100 million by issuing 67 million shares. They would need to be issued at about $1.50 each (which I consider fair value). The number of shares on issue would be 330 million.
It could be a very attractive proposition to own 10% of the whole project for $100 million, considering production could easily be increased significantly (to 2 million tonnes a year).
Is the preferred equity investor prepared to pay this price ($1.50)?
The worst case scenario is two cornerstone investors being issued 75 million shares at 65 cents. Neither would exceed the 20% threshold and the number of shares on issue would be 415 million.
Producers that use the Mannheim process should be looking to source natural SOP elsewhere because of rising energy costs and environmental issues with acid disposal. They are potential investors.
Any other thoughts on the $100 million of equity raising?
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