Green Critical Minerals Ltd (ASX: GCM) recently completed an oversubscribed capital raise of approximately A$2.48 million in November 2024. The funds were secured through the placement of 381.5 million fully paid ordinary shares at A$0.0065 per share, primarily from sophisticated and professional investors . The capital is being utilized to advance the company’s Very High Density (VHD) graphite block pilot plant and to progress the McIntosh Graphite Project, including the completion of a pre-feasibility study .
As of the end of December 2024, GCM reported a cash position of A$1.885 million . While there is no public indication of an imminent capital raise, the company may consider additional funding to support further development and commercialization efforts.
Alternative Funding Options for Green Critical Minerals:
Government Grants and Programs: The Australian Government offers several initiatives to support critical minerals projects, such as the $50 million Critical Minerals Development Program, which provides grants ranging from $1 million to $30 million . Additionally, the $4 billion Critical Minerals Facility, managed by Export Finance Australia, aims to fill market funding gaps for such projects .
Tax Incentives: The Critical Minerals Production Tax Incentive (CMPTI) offers tax credits to companies refining critical minerals, helping to offset production costs and encourage domestic processing .
Strategic Partnerships: Forming joint ventures or strategic alliances with larger mining companies or technology firms can provide both capital and technical expertise, facilitating project development and market access.
Debt Financing: Securing loans or credit facilities from financial institutions or government-backed entities can provide necessary capital without diluting existing shareholders’ equity.
Offtake Agreements: Entering into agreements with end-users or manufacturers to purchase a portion of future production can provide upfront capital or favorable financing terms, ensuring a market for the product upon project completion.
By leveraging these funding avenues, Green Critical Minerals can diversify its capital sources, mitigate financial risks, and accelerate the development of its critical mineral projects.
Given the current cash position of $1.32 million AUD, a $3 million AUD raise at $0.0136 per share could happen, resulting in around 13% dilution. This is relatively manageable, considering the potential upside if GCM successfully moves towards commercialisation. The success of this CR would largely depend on positive updates regarding customer validation or JV progress to justify the raise.
However, this is just speculation. If the share price moves past $0.020 AUD before the raise, they might set the issue price at around $0.017 AUD after a typical 15% discount. This would result in issuing approximately 176.5 million shares, leading to about 10.7% dilution. Post-raise, the share price could stabilize around $0.0197 AUD, reflecting the adjusted valuation.
A government grant, loan, or JV would obviously be a better outcome and is possible. All guesswork for now... but the future looks good.
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