Montero Mining and Exploration (CVE:MON) said Tuesday that it plans to raise up to $1 million through a non-brokered private placement financing.
The placement will consist of up to 8 million units priced at 12.5 cents each. Each unit will be made up of one common share and one share purchase warrant. Every warrant will allow the holder to acquire one additional share for 25 cents, for a period of two years following the closing date.
If the closing price of Montero's shares equals or exceeds 30 cents for 20 straight trading days four months after the warrants are issued, then the company will have the right to convert the warrants.
The new funds will be used for exploration and general working capital requirements, Montero said.
Montero is engaged in the development of its flagship rare earth element (REE) project at Wigu Hill, Tanzania. The project is a high-grade, undeveloped light REE deposit, where the current focus is a fast-track strategy to advance a portion of the large deposit to the mining and production stage.
It covers a 142 square kilometre area and grab samples have yielded results as high as 27.25% total rare earth oxides, with up to 16.68% from drilling. The company also has four phosphate assets in South Africa and uranium assets in Tanzania and Quebec, Canada.
Earlier this month, it said that hydrometallurgical testwork at Wigu Hill represented a “significant step” in its efforts to reduce costs at the project.
In a project update, the company said it has been researching various metallurgical technologies to potentially reduce operating and capital costs. The objective of the testwork was to reduce reagent consumption in the hydrometallurgical leach process that would provide feed to a rare earth elements (REE) extraction refinery.
Montero noted that the testwork achieved “good recoveries”, while “significantly reducing” reagent requirements allowing for potentially lower operating costs for processing the rare earths at Wigu Hill.
In October, Montero and Mintek, South Africa's national mineral research organization with over 25 years of experience in REE extraction, agreed to collaborate to "further develop and optimize" the Montero leaching process.
Mintek will continue Montero's bulk leach test program to optimize the leaching process and conduct a rare earth extraction process at pilot plant scale. In return, Montero will provide Mintek with a bulk sample from the Wigu Hill deposit to be used as part of Mintek's program to develop its independent, proprietary refining technology.
Montero also recently signed an arm's length, non-binding term sheet with a strategic investor for funding the rare earth company with a mine to refined rare earth for sale strategy.
The financing announced Tuesday still needs regulatory approvals to close, including the approval of the TSX Venture Exchange.
Separately, the company also announced it has reached a deal to settle up to $700,000 in debt with various parties, subject to regulatory approval. The debt relates to services and consulting, and Montero will pay the creditors common shares of up to 5.6 million.