Peak Rare Earths Limited (ASX: PEK) has raised $6 million through a two-tranche institutional equity placement, with the funds to be used primarily for advancing the Ngualla Rare Earth Project in Tanzania.
The funds raised will be used to support the development of the Ngualla Project, which will include early works, land relocation, and community programs.
In addition, the funds will cover transaction costs related to the Shenghe agreement—which outlines an integrated investment, funding, and development solution for the Ngualla Project—including capital raising and legal fees, as well as general corporate overheads and working capital.
The agreement involves Shenghe committing to an investment of A$96 million allowing Peak Rare Earths to progress towards a Final Investment Decision without needing to contribute further equity funding.
Peak Rare Earths raised $6 million by issuing approximately 60 million new fully paid ordinary shares at $0.10 per share.
The placement is divided into two parts: Tranche 1, which raised $4 million, and Tranche 2, which will raise an additional $2 million, subject to shareholder approval.
Shenghe Resources (Singapore) Pte Ltd, Peak’s largest shareholder, intends to increase its stake to 19.9% through the Tranche 2 placement, pending regulatory and shareholder approvals.
Several members of Peak’s board, including CEO Bardin Davis, have also committed to participating in the second tranche.
In addition to the placement, Peak Rare Earths will offer shareholders the opportunity to purchase shares at the same price of $0.10 per share through a Shareholder Purchase Plan (SPP), which aims to raise up to $2 million. Eligible shareholders will be able to apply for shares up to a value of $30,000.
The SPP is expected to begin on November 21, 2024, and close on December 24, 2024, with final settlement and share issuance anticipated in January 2024.
The funds from the SPP will be used for the same purposes as the placement: project development, transaction costs, and corporate expenses. The SPP is subject to shareholder approval, with settlement expected by January 2024.
Commenting on the Placement, the Executive Chairman of Peak, Dr. Russell Scrimshaw, said: “This capital raising will support a continuation of Peak’s strong momentum as we progress our planned investment, funding, and development transaction with Shenghe and the Ngualla Project towards a Final Investment Decision. I would like to welcome our new shareholders and thank Shenghe and other major shareholders for strongly supporting the raising. I am also pleased that other eligible shareholders will be provided an opportunity to invest at the same issue price through a Shareholder Purchase Plan.”
The Ngualla Rare Earth Project
Located approximately 147km from the city of Mbeya in southern Tanzania and on the edge of the East African Rift Valley, the Ngualla Project is one of the largest, highest grade, and lowest cost Neodymium and Praseodymium (NdPr) rare earth projects in the world, with an estimated resource of 176 million tonnes at a grade of 2.24% total rare earth oxides (TREO).
The project entails the development of a mine, mill, beneficiation facilities, concentrator, community projects, and associated infrastructure.
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