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Energizer Resources raises $7.5 mln for Molo deposit

Last updated: 08:27 03 Feb 2014 EST, First published: 09:27 03 Feb 2014 EST

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Energizer Resources (TSE:EGZ)(OTCQX:ENZR) says it has now closed the financing to fund its feasibility study at the Molo graphite deposit in Madagascar, raising a total of C$7.49 million. 

The company sold 62.38 million subscription receipts, resulting in 62.38 million common shares and 31.19 million warrants. Management and employees of Energizer subscribed for a total of $501,000 in the private placement offering.

Each subscription receipt was sold at a price of 12 Canadian cents apiece, and was exercised for one common share and one half of one share purchase warrant. Every warrant can buy an additional common share at a price of 18 cents for a period of three years. 

The news Monday follows Energizer's confirmation that it has a high proportion of  "premium jumbo and large flake graphite" at its Molo deposit on Friday, reporting first results from its pilot plant operations. The company said the average mass recovery into the large and extra-large flake category was 43.5%, based on the results of 15 fraction analyses of the combined concentrate. Of the highlights, the average grade of the extra-large flake, which it says is greater than "+48 mesh", was 97.7% total carbon (Ct).

The company said Friday that the results confirm the "robustness" of the proposed flowsheet, and that the graphite flakes from the Molo deposit can be upgraded to high grade concentrate by means of a simple flotation process.

The proceeds from the financing completed today will be used mainly to fund the bankable feasibility study for Molo, which will be a big step in satisfying the due diligence requirements of financial institutions that are interested in providing mine and equipment  financing during development.

The company last year signed a preliminary deal with Cat Financial for potential project financing for the future Molo mine, which based on Energizer's preliminary economic assessment and pilot plant updates, ranks as one of the top flake graphite projects in terms of quality and size in the world. 

The preliminary economic report on the asset estimated a pre-tax net present value of $421 million at a discount rate of 10%, with a 48% internal rate of return. Capital costs were pegged at $162 million, with a three-year payback period.   

The feasibility study, which is now underway, is expected sometime in the third to fourth quarter of this year. Funds from the private placement financing will also be used for additional marketing efforts, including to generate graphite concentrate product for product evaluation.

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